TNAG-1173-FCO40-1465-Future-of-Hong-Kong-special-study-by-FCO-for-the-Prime-Minis-1982 — Page 236

SECRET

the status quo or something very much like it.

Although

HMG would still wish to establish a better understanding

than we have at present as to the proper share of services

on the routes between Hong Kong and China, the Chinese

might seek a monopoly of such services. We should resist

this but some realistic accommodation may be necessary.

Hong Kong as a Special Administrative Region (SAR) of China

12. If Hong Kong became an SAR it would still be

necessary for HMG to retain responsibility for the conduct

of external relations. If this was not done, the results

would be highly damaging for UK-based and Hong Kong-based

airlines:-

(i) CPA's position as a Hong Kong-based airline

would be totally dependent on whether the Chinese Government was prepared to

(ii)

designate them for services to and from

Hong Kong and to negotiate rights for

them with foreign governments. The

Chinese government might wish to have these services operated in large measure

by their own airline instead, and if

they were prepared to designate CPA to operate

any of them, they would no doubt demand a financial quid pro quo;

UK-based airlines would be entitled to about

half the services between London and Hong

Kong (say 10 out of 20 instead of British

Airways and British Caledonian's 13 now).

SECRET

6

/Since