TNAG-1172-FCO40-1453-Future-of-Hong-Kong-1982 — Page 135

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13. Premier Zhao Ziyang, during a call by Fung King-Hey,

Chairman of Sun Hung Kai Securities on 16 April, said a

solution would have to be justifiable to the Chinese

people as regards national sovereignty and that the

present prosperity of Hong Kong should not be harmed. All

sides should give thorough consideration to the matter.

Reference might be made to China's proposals for Taiwan.

Consideration could be given to retaining the employees

of Government organisations.

14. Huan Xiang, Vice President, Academy of Social

Sciences, during a visit to Australia in early May,

remarked to his DFA escort officer that: China would

exercise its sovereignty over Hong Kong; continued

British administration after 1997 was not feasible;

China realised question had to be settled during next

2 or 3 years with the changeover during the last 5 years

of the NT lease; Hong Kong would be under Chinese law,

security forces integrated with PLA; very difficult for

Stock Exchange to continue; local council elected

proportionally to represent different resident populations;

Hong Kong residents would be able to travel overseas but

on PRC passports.

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