TNAG-1173-FCO40-1465-Future-of-Hong-Kong-special-study-by-FCO-for-the-Prime-Minis-1982 — Page 156

(iii)

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However, given clear Chinese political will to make it work a less formal arrangement might be the only achiev- able compromise which would maintain confidence for the time being.

c) Effect on Hong Kong: Would be helpful

to confidence, so long as there was minimum change in present arrangements, and a clear Chinese commitment to the new arrangements.

d) Legal Implications: The extent of UK

powers and jurisdiction in respect of the territory would depend on the agreed arrangements.

As for (ii) but with Hong Kong formally designated as a Special Administrative Region of the PRC:

a) Likely Chinese attitude: Perhaps more

acceptable than (ii), since Hong Kong would be formally incorporated into the PRC; on the other hand even more difficult to reconcile with continued British adminis- tration.

b) Acceptability for HMG: Would create serious

problems if PRC attempted to exercise any sovereign powers. There could be particu- lar difficulties over public order and defence. Responsibility of the UK (and not the PRC) for internal matters and for the conduct of external relations would have to be clearly spelled out. Acceptable provided there were clear guarantees of Chinese non-interference (see Legal Implications).

c) Effect on Hong Kong: Impact on confidence

would vary with assessment of PRC attitude. There would be doubts about Chinese intention to allow British administration to continue. Commercial and other confi- dence could be affected.

d) Legal Implications: The incorporation of Hong Kong as a Special Administrative Region of the PRC would be compatible with continued British administration only if the agreed arrangements gave the UK adequate powers and jurisdiction in respect of the conduct of external affairs and internal administration without interference from the

PRC.

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