TNAG-1040-FCO40-1290-Future-of-Hong-Kong-1981 — Page 92

DSR 11C

3.

SECRET

-2-

This leads me to mention the problem we are now

increasingly having to face, namely policy and tactics over

Hong Kong, and how this may affect the planning and handling

of your visit to China.

4.

When I was in Hong Kong, I was very struck by the degree

to which the problem of the future has become a matter of

public debate. It would be wrong to suggest that there is

any panic. Indeed, the economy and confidence generally are

remarkably buoyant.

But they are also brittle and dependent

to a great extent on an expectation that there will be some

kind of new arrangement between Britain and China over

Hong Kong before too long.

5. This means that when you go to China there will be very

high expectations that a solution to the Hong Kong problem

will result, or at the least that some tangible progress

will be evident, for example an agreement to enter

negotiations. In practice, I suspect that it will be rather

difficult to get anything at all clear cut. It is not that

the Chinese want to alter the present position. On the

contrary they are content with it and indeed derive enormous

economic benefit from it. But they are very reluctant to

enter into any formal agreement with us which might appear

to compromise their claim to Hong Kong.

6. There is therefore something of a risk that if, when you

go to China, the leaders there merely repeat their previous

generalised assurances, public and commercial opinion in

Hong Kong could be disillusioned and confidence might be

affected. We need to guard against this and to ensure that

the people in Hong Kong have a reasonable assurance

that British administration will continue.

SECRET

17.