TNAG-1040-FCO40-1290-Future-of-Hong-Kong-1981 — Page 68

GRS 733

SECRET

FM FCO 17104OZ NOV 81

SECRET

TO PRIORITY HONG KONG

TELEGRAM NUMBER 884 OF 17 NOVEMBER

AND TO PRIORITY PEKING (PERSONAL FOR AMBASSADOR)

FOR GOVERNOR FROM CLIFT

MIPT:

1. FOLLOWING IS TEXT OF DRAFT OD PAPER:

QUOTE:

TOP COPY

нки охол

HOLY 137ATELIER NO. 5) 19 NOV 1981

DESK OFFICER

INDGX

A

Action Ad

No

CGE 19/11

Pas volu

233

FUTURE OF HONG KONG: CONTINGENCY OPTIONS

1.

THE ATTACHED PAPER OUTLINES THE PROBLEMS FOR HER

MAJESTY'S GOVERNMENT OF UNCERTAINTY OVER HONG KONG'S FUTURE

WITH THE APPROACHING END OF THE NEW TERRITORIES LEASE IN

1997. THE PRESENT, RELATIVELY PRAGMATIC CHINESE ADMINIS-

TRATION PROBABLY FAVOUR A CONTINUATION OF THE STATUS QUO

BUT ARE UNWILLING TO MAKE ANY HASTY MOVE WHICH MIGHT PRE-

JUDGE THE FINAL OUTCOME FOR THE TERRITORY TO THEIR DIS-

ADVANTAGE. HER MAJESTY'S GOVERNMENT COULD ALSO LIVE WITH

DE FACTO CONTINUATION OF THE PRESENT POSITION WERE IT NOT

FOR THE LEGAL PROBLEM THAT THE BASIS OF OUR ADMINISTRATION

OF THE NEW TERRITORIES WILL EXPIRE IN 1997. MEANWHILE

CONCERN IS GROWING IN HONG KONG ABOUT THE FUTURE.

CONFIDENCE THERE IF IT FALTERED COULD SLIDE QUICKLY,

POSSIBLY WITH A RUN ON

THE HONG KONG DOLLAR AND RAPID WITHDRAWAL OF INVESTMENTS.

THIS WOULD CREATE MAJOR PROBLEMS FOR HER MAJESTY'S GOVERN-

MENT IN OUR RELATIONS WITH CHINA, OVER THE CREDIBILITY OF

OUR COMMITMENT TO THE PEOPLE OF HONG KONG AND DOMESTICALLY.

(TO GIVE ONLY ONE EXAMPLE, LARGE NUMBERS OF HONG KONG

RESIDENTS COULD SEEK ENTRY TO THE UNITED KINGDOM.)

2.

WE NEED SOON TO DECIDE ON THE TACTICS OF DISCUSSION

WITH THE CHINESE ON THIS ISSUE FOR TWO REASONS:

(A) CONCERN ABOUT THE FUTURE IN HONG KONG COULD COME TO A

HEAD OVER THE NEXT 2 OR 3 YEARS AND PRECIPITATE A

SLIDE IN CONFIDENCE:

1

SECRET

/(B)

234

See/244