TNAG-1167-FCO40-1447-Future-of-Hong-Kong-1982 — Page 112

CODE 18-77

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Mierz

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Mr Clift (HKGD)

THE FUTURE: LATEST PRESS SPECULATION

1612 Pão 17/2

1. I mentioned to you that Miss Colina MacDougal spoke to me this morning about the latest rumour on the future' which is apparently on the news tapes. This quotes a Hong Kong Chinese newspaper as saying that Britain and China have now finalised all the arrangements concerning the future and that a treaty stating this will be published on 1 May.

2.

Miss MacDougal said that she was interested in this story because she and a number of other journalists had been told last week something bearing on this by what she described as 'Chinese official sources close to the Embassy'. She would not be drawn about who these were but did not demur when I suggested that it might be the Xinhua or other Chinese newspaper correspondent. According to this source 2 principles had been agreed during the LPS's visit to Peking, with regard to the future of Hong Kong, namely: -

i.

China's sovereignty should be restored; and

ii. Hong Kong's economic prosperity should be

preserved.

The Chinese source went on to say that now these 2 principles had been agreed the problem of the future of Hong Kong had in effect been resolved; it merely remained to work out the details.

3. Miss MacDougal sought my comments on the above. I told her in effect that I was aware of no such agreement during the LPS's visit; that the public statements by the LPS in Peking and Hong Kong(and subsquently) summarised the position; that in my view there had been a step forward in the Chinese position by comp- arison to the earlier 'hearts at ease' formula; that for the Chinese, in political terms, the question of sovereignty was clearly the nub; and that in the discussions which would be held with the Chinese over the next 2 - 3 years I would expect a formula to be worked out which covered the 2 principles to which the Chinese source referred.

4.

This was a rather more diffuse conversation than the above might suggest. One point which struck me as interesting was that Miss MacDougal, in referring to the 2 principles, began by suggesting that they were mutually incompatible; clearly envisaging that by 'restoration of sovereignty the Chinese meant that they would take over the administration of the Territory. I said that I saw no reason to assume this and explained a number of possible scenarios. She did not seek to challenge

/what

* but that it also posed difficult political legal problems for the U.K

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