DSR 11C
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of the public attention focussed on 1997, they could not risk acquiescing in any formal or legal action that would prolong British administration without a major political concession on our part.
they will do
3. Any initiative on Hong Kong might also have consequences for their policy on unification with Taiwan: nothing over Hong Kong that would make this more difficult. Increasingly, the Chinese see a connection between policy towards Taiwan and Hong Kong. When Lord Carrington was in Peking in April 1981, Deng Xiaoping said that we should study Chinese policy towards Taiwan when considering Hong Kong. The essentials of present Chinese policy (see Annex A for details) are that Taiwan must give up its claim to statehood and its flag but will then be allowed a large degree of local autonomy, including its own armed forces. The parallel for Hong Kong would be, as a minimum, the relinquishing of sovereignty in return for a negotiable degree of autonomy.
4.
Current pressures on the Chinese leadership are such that they are likely to do the minimum necessary to preserve the advantages they gain from Hong Kong. They will avoid specific agreements if they can. They may even be prepared to suffer severe economic loss rather than take political risks. Moreover we clearly cannot rely on the leadership in Peking remaining constant. We cannot exclude the emergence of a more ideologically and less pragmatically inclined power group.
5. The Chinese apparently believed in 1979 that Deng's general assurances about the interests of investors being safeguarded would be sufficient to deal with the problem of confidence for some time to come. This formula allowed
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