TNAG-1171-FCO40-1452-Future-of-Hong-Kong-1982 — Page 58

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FUTURE OF HONG KONG

1.

Plas 11/6

285

You will wish to see Mr Coxs imaginative suggestion for an alternative approach to the problem of the future of Hong Kong. The premise, with which I agree, is that it will be very difficult for the Chinese to enter, on terms that we can accept, into an agreement that does not become operative until 1997. The aim is to remove the necessity for so doing whilst at the same time avoiding the uncertainty that would result if matters were simply set aside.

2.

Mr Cox's proposals would have a political appeal for the Chinese. Politically they should not be difficult for us: indeed they offer the attraction of reducing the likelihood of a long negotiation ending in a messy compromise. But I believe business would find it very difficult to live with the uncertainty as to the timing of rendition that these proposals imply (11(2) 111(3) and (4) and IV(1)). Current confidence rests largely on the assumption that nothing will change at least, until the mid-90's, when a transition running up to 1997 might begin. This would be undermined by what is proposed however much nodding and winking went

Moreover the hoisting of Chinese flags and the appointment of a Chinese Resident Representative would add to that unease, because, with what is said about reversion at any time, both would be seen as signs of the beginning of an early end.

on.

3. We have to balance the need to meet Chinese political require- ments against consideration for business confidence without which our interest in Hong Kong subsides. Acknowledgement by us of PRC sovereignty is, I think, generally agreed to be a minimum Chinese requirement. A further requirement is likely to be participation in the administration of the territory: that might be met by Mr Cox's flag and representative proposals.* Might not natural Chinese determination to remain uncommitted on timing of final reversion be overcome by means of a notice clause generous enough to satisfy the business community?

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25 May 1982

cc: Mr Clift,

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Mr Williamson, HKGD

Mr Thomson

PAB Thomson

Far Eastern Department

The In

Польбом Elliott адали

I agree strongly with your $2. Another difficulty which

Striker me is IVF (18);.

if

a plebiscite shows a louge majority in favour of British administration, or indeed sovereignty, our hands wit be tied in Falklands fashion. But if the confidence / timing points can be improved, this might form the basis of a negotiating position, especially if Ministers are reluctant

to grasp the sovereignty nettle.

Worth more study. A

See para 3 of Mr Clifty minute of 25 May at

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