TNAG-1041-FCO40-1291-Future-of-Hong-Kong-1981 — Page 51

DRAFT BRIEF

DSR 11C

SECRET

FUTURE OF HONG KONG

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 cooperation with Guangdong.

2.

As Lord Carrington explained, we face a legal

The future is a subject of growing

problem over 1997.

discussion in Hong Kong and uncertainty is bound to affect

confidence. We have a common interest in bolstering

confidence and would be grateful for any views the Chinese

may have on ways of doing this.

(Depending on Chinese response)

3. / Concern over the future is growing.

assurances have been of great value.

Chinese

Enough to maintain

confidence indefinitely but for the timing restraint of

basis

Should

the United Kingdom Order in Council which ends the current

for administration in New Territories.in 1997; 1Local andands

overseas investorst(including lawyers and accountants) are

particularly interested in ensuring continúity of law,

currency and trade agreements affecting Hong Kong.

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.

4.

1

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

Mrs Thatcher who discussed Hong Kong in general terms with

Chinese leaders in 1979 will want to follow up when she

visits, and will hope to make progress.

5.

(If Chinese repeat assurances ) We accept these.

Problem is that public opinion and investors in Hong Kong

may not, while faced with uncertainty about future legal

arrangements.

SECRET

/6.