TNAG-1201-FCO40-1503-Cases-of-immigration-from-Hong-Kong-to-the-UK-1982 — Page 19

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HONG KONG: CALL ON LORD BELSTEAD BY LORD SHEPHERD: 5 OCTOBER

1. You were present when Lord Shepherd called on Lord Belstead. The following are the main points arising.

2.

Lord Shepherd thought the Prime Minister had spoken well in Peking on the future of Hong Kong, indeed prominent Hong Kong businessmen like Fung King Hey had said so, too. But things had gone badly wrong following the Prime Minister's press conference in Hong Kong on Monday 27 September. The Prime Minister's hard line on the 19th Century treaties had profoundly dismayed the Hong Kong business community: they all accepted that sovereignty would in the end go to China, and what they wanted was early agreement on a continuing British administration. On the basis of the Prime Minister's remarks he foresaw grave problems ahead for the confidence of the business community in Hong Kong. He had watched a televised transcription of the Prime Minister's press conference with senior Hong Kong businessmen in London, and their reaction had been adverse.

3. Lord Shepherd suggested that the best way to overcome the non- negotiable Chinese position on sovereignty would be first to nego- tiate a Treaty of Friendship with China, into which a new draft constitution for Hong Kong could be slotted. This could lead to an administrative arrangement for Hong Kong, within the framework of Chinese sovereignty, which could provide, say, 25 years during which time there could be no change in Hong Kong's position without the consent of the administering power. Any such solution could not be proposed by HMG but would have to be floated by a 'marriage

1 broker'. Fung King Hey was always available if HMG wished him to

act as a channel.

4. Lord Shepherd's advice was that in the first instance talks with the Chinese on this question should be conducted at a relatively low level. He judged that we had 12-18 months within which to make substantial progress. At the end of that time, if there were no breakthrough, very considerable damage would be done to the Hong Kong economy.

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5.

Finally, Lord Shepherd said Fung King Hey was worried about his own position. If things were to go wrong in Hong Kong he would of course wish to take up residence elsewhere. He did not at present have any alternative nationality. He could easily apply for, say, Canadian citizenship, but this would become known and, given his economic position, might have damaging effects on confidence in Hong Kong. Could he have an assurance from HMG that he could take up residence in Britain?

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CONFIDENTIAL