TNAG-1173-FCO40-1465-Future-of-Hong-Kong-special-study-by-FCO-for-the-Prime-Minis-1982 — Page 84

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FUTURE OF HONG KONG: SPECIAL STUDY FOR THE PRIME MINISTER

1. At her meeting with you on 28 July, the Prime Minister said

that a study on Hong Kong should be prepared to examine solutions to

the problem of the future and the implications of any changes which might emerge from an agreement with China.

2. I now submit this study. It is the product of a great deal of

work completed during the last month in the FCO. The Governor of

Hong Kong and the Ambassador to Peking have been consulted throughout

and the Hong Kong Attorney-General and Political Adviser have also

been involved. In addition contributions have been made by different Whitehall Departments on specialised points which are

covered in the Annexes.

3. The aim of the paper is to provide advice on possible arrangements for the future of Hong Kong, on their implications for HMG and on the tactics to be pursued. It concludes that early action is

necessary to maintain confidence. It suggests that the positions of the UK and Chinese Governments and the interests of the people of Hong Kong could be reconciled by a 'management contract' involving acknowledgement of Chinese sovereignty but only on condition that British administration and control would continue effectively beyond

1997. The possible form of such a contract is considered and the implications of an acknowlegement of Chinese sovereignty are discussed in general terms and in a number of detailed aspects which are dealt

with more fully in the Annexes.

4. The study emphasises that such an arrangement would be difficult

to achieve. If the Prime Minister accepted that it would nevertheless be a reasonable objective, it would probably be right, during her visit to Peking, to aim simply at agreement with the Chinese on the holding of talks to discuss the question further. The Governor of Hong Kong

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