TNAG-1173-FCO40-1465-Future-of-Hong-Kong-special-study-by-FCO-for-the-Prime-Minis-1982 — Page 121

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willingness to explore the concept of a 'management contract'.

However, a concession of this kind would at best buy no more than

Chinese agreement to continuing talks; it would not ensure a

favourable outcome.

41. But whatever the gap remaining between the two sides at

the conclusion of the Prime Minister's discussions it will be

essential, in order to maintain confidence in Hong Kong, to give

the impression that progress had been made, at least to the

extent of being able to announce at the end of the visit that

agreement has been reached on the early commencement of talks

aimed at mutually acceptable arrangements for the future. It

would also be highly desirable from the point of view of

confidence in Hong Kong, but tactics on this would need to be

decided on the spot, to announce a date on which this new phase

of talks would begin.

42. If agreement on the basis for the talks cannot be reached,

we should aim for discussions without commitment on either side.

The first stage would probably then be devoted on our side to

convincing the Chinese that continued British administration and

authority are essential to confidence in Hong Kong; and on the

Chinese side to an exposition of their position on sovereignty

and their belief that their plan would work. But the talks will

almost certainly reach a point where if breakdown is to be

avoided, with all the attendant consequences, one side or both

will have to shift.

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/43.