TNAG-1167-FCO40-1447-Future-of-Hong-Kong-1982 — Page 134

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proposals on Taiwan would allow for a considerable degree

of autonomy but they would still be aimed at bringing the

indigenour Chinese provincial authority under the Peking

umbrella. There is in Hong Kong no local Chinese admin-

istration comparable to that in Taiwan. It would be

very difficult to create one which investors in the

Territory and outside would regard as guaranteeing the

security of their money. Therefore, as Sir P Cradock points

out, the key point is that continued British administration

is needed to maintain confidence. There is no sign yet

that the Chinese have begun to grapple with the implications

of this. It will thus be an important aim to get this

point over to them without scaring them off with the idea

that we want to undercut their own constitutional position

on the Territory.

But we can expect the question of cont-

inued British administration to be a trickly one in any

negotiations.

6. This makes it necessary for us to consider the poss-

ibility of concessions on sovereignty over the whole of the

Territory. Such a move, which might take a number of

forms between 'acknowledgement' of the Chinese position and

a specific relinquishment of sovereignty, would probably

be the only way of ensuring that British administration

could continue beyond 1997.

7. The Chinese may also be interested in obtaining other

concessions from us, particularly on the appointment and

powers of a Chinese representative in Hong Kong. This

could be a useful point of leverage for us.

Although we

have resisted this idea in the past, on the grounds that it

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