TNAG-1173-FCO40-1465-Future-of-Hong-Kong-special-study-by-FCO-for-the-Prime-Minis-1982 — Page 154

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b) Effect on Hong Kong

c)

This system would not sustain confidence in Hong Kong, because: -

(i) the constitution and the legal system would be subject to changes imposed by the PRC, whose intentions are uncertain;

(ii) the Hong Kong dollar would be

affected; capital would be withdrawn;

(iii) many Hong Kong residents would

try to leave.

Legal Implications

Presumably persons with no substantial connection with the UK would be deprived of their citizenship under the British Nationality Act 1981. Some might claim to be stateless or to be refugees and awkward problems might arise if there was a large exodus from the territory (see Annex K).

B. A Possible Solution

2. The only way of reconciling UK requirements with those of

the Chinese is likely to be an arrangement whereby the Chinese

agree to continuity of British control over the whole territory,

indefinitely or for a period of years after 1997, in return for

an acknowledgement of Chinese sovereignty. Possible forms which

such an arrangement might take are examined below:-

(i)

A 'lease-back': UK would recognise Chinese

sovereignty over whole territory. In return PRC would grant HMG a lease of the entire territory period terminable on a given

(substantial) period of notice by either side.

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/ a)