TNAG-1169-FCO40-1449-Future-of-Hong-Kong-1982 — Page 111

SECRET

Foreign and Commonwealth Office London SW1A 2AH

RJT McLaren Esq Political Adviser

Telephone 01- 233 3184

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Dear Robin,

FUTURE OF HONG KONG

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Our reference

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As you know we are making progress on the major principles for discussion of this subject when the Prime Minister goes to Peking in September. At the same time we need to consider a pretty wide range of points on which the Chinese may seek concessions from us, in addition to the key question of sovereignty. This letter lists a number of these and gives our first thoughts.

Chinese Representation in Hong Kong

2.

See 1342

When this was raised by the Chinese on earlier occasions Ministers took the line that the time had not yet come for such a move. When the Secretary of State went to Peking a year ago he was briefed to say that we could only consider the idea in the context of measures to strengthen confidence. It might now very well come up in that context and we need to look at it in more detail. As we see it, we must take a firm line to avoid acceptance of anything approaching a rival Governor. If the Chinese tried to establish the right to be consulted on major internal and external policy issues we would have to refuse, mainly because any system of this sort would rapidly become unworkable for the Governor. Moreover, any suggestion that we had given away our freedom of administrative action to the Chinese could harm confidence. But

I think we could consider the upgrading of the status of the NCNA Director to that of a formal representative, with an understanding whereby he could discuss matters concerning Hong Kong/Chinese relations with the Governor (in practice this would not amount to much more than the present situation with the NCNA).

Rent

3.

It is quite possible that the Chinese might suggest an annual rent for Hong Kong. They might indeed represent this as a right to a proportion of Hong Kong's taxation. The latter would look too much like giving the Chinese a share in the government but, provided we had a clear understanding on British administration, there might be no objection in principle to some form of rent. In practical terms this is something on which your views would be particularly helpful. The bill would ultimately fall on the Hong Kong taxpayer as his British counterpart would not presumably be

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