TNAG-1171-FCO40-1452-Future-of-Hong-Kong-1982 — Page 26

9. Next Moves

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PM's visit in September has raised expectations of solution. This will not come quickly and

the pace should not be forced. But some progress must be demonstrated. Best hope may be agreement

to start official talks.

First priority must be for Ministers to consider

proposition of acknowledgement of Chinese

sovereignty. Should only be in exchange for sufficient continuing British administration to maintain confidence (this means little change), but some concessions to Chinese face may be

necessary. PM must be consulted. Needs careful

timing and explanation. Suggest meeting with

MacLehose, Youde, Cradock. Hong Kong solution

as aid to:

a)

b)

c)

Relations with China (World Strategy) Commercial cooperation and opportunities; Avoiding major problems for HMG later;

Could be foreign policy coup.

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