TNAG-1168-FCO40-1448-Future-of-Hong-Kong-1982 — Page 22

SECRET

DSR 11C

SECRETARY OF STATE'S MEETING WITH THE PRIME MINISTER

ON 2 APRIL : FUTURE OF HONG KONG

POINTS TO MAKE

1. Chinese seem at last to be focussing on problem.

They need economic benefits of Hong Kong for foreseeable

future. But political difficulties for them.

2. Hong Kong also important to UK. Hong Kong a plus in

relations with Chinese. Significant trade and capital

investment from UK. Population wants Hong Kong to remain

British. Absorption by China could lead to huge problems.

Considerable British investment. Immigration problems.

100,000s would look to UK for resettlement. Also much

investment from allies eg US, Australia, Japan. Political

significance of Western foothold in Far East. Now only

15 years to 1997. Ever-present risk of collapse of

confidence in territory increases as time passes. Solution

of problem would be major achievement.

3. Need public assurance from Chinese that Hong Kong

administration

will remain! British/for foreseeable future. Continued

Under

Λ

British administration likely to be most difficult for

expect

Chinese to accept. They will need at least our acceptance

of ultimate Chinese sovereignty.

SECRET

/4.