TNAG-1041-FCO40-1291-Future-of-Hong-Kong-1981 — Page 26

SECRET

LORD PRIVY SEAL'S VISIT TO CHINA : 4 TO 8 JANUARY 1982

BRIEF NO 2a: FUTURE OF HONG KONG

Points to Make

LINE WITH CHINESE LEADERS

1.

Recall Lord Carrington's discussion with Chinese leaders in April. Glad relations over Hong Kong are so good. Value practical co-operation with Guangdong.

2.

1997.

As Lord Carrington explained, we face a legal problem over

The future is a subject of growing discussion in Hong Kong

We have a common and uncertainty is bound to affect confidence. interest in bolstering confidence and would be grateful for any views the Chinese may have on ways of doing this.

3.

(Depending on Chinese response) Concern over the future is growing. Chinese assurances have been of great value. But the legal

Local and overseas and other problems relating to 1997 remain. investors (including lawyers and accountants) are particularly interested in ensuring continuing stability in matters affecting Hong Kong. Should aim to achieve this without prejudicing China's position on Hong Kong. Otherwise could be rapid dispersal of capital and industrial resources of Hong Kong within next few years.

(Provided that Prime Minister's visit has been agreed)

4.

!

There will be a further opportunity for discussion of the question

when the PM visits Peking.

5.

Problem is (If Chinese repeat assurances) We accept these. that public opinion and investors in Hong Kong may not, while faced with uncertainty about future legal arrangements.

6.

(If Chinese ask for our specific views) Here to learn rather than go into detail. Of course we have been thinking but need to know Chinese ideas. Should aim to recommend measures to maintain confidence of investors in Hong Kong in the medium term.

7.

(If Chinese offer specific views) These views will be carefully studied by my officials. The opening of a dialogue on the future of Hong Kong is to be welcomed.

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/LINE