TNAG-1235-FCO40-1548-Future-of-Hong-Kong-1983 — Page 49

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There seem to be only three broad possibilities: China maintains the status quo, China increases its power over Hong Kong or takes Hong Kong in part or whole, and China actually increases the size of Hong Kong by adding part of Guangdong to it. In all cases it is China that is important and retains the initiative and the Hong Kong authorities are seen as being in a responsive or subordinate position.

The first option, maintaining the status quo, has much to recom- mend it for China as the real economic gains would continue indefinitely. If China resumes the responsibility for administering Hong Kong and incorporates it into China, much the same num- ber of people would have to be fed and clothed but without China gaining foreign exchange from so doing, employment would still have to be provided, and much capital and skill could be lost. If 1997 could come and go unnoticed, it would serve China well, but at present this would seem difficult to achieve, for in Hong Kong the legal side requires reasonable certainty to function adequately. If it did come to pass the economy could flourish, perhaps after an initial downturn caused by uncertainty.

HOW IT MIGHT HAPPEN

The second option of China increasing its power over Hong Kong, encompasses a wide range of possibilities. Starting with power changes that would not change the area of Hong Kong, the simplest solution would be for China to put in its representative as governor, possibly locally elected, and maintain all else unchanged, a course which has been suggested by the communist press in Hong Kong. It would involve a gradual replacement of British officials by Chinese. It is hoped that in this way the trade and financial successes of Hong Kong would not be lost. Britain might agree to this as a workable transition method, but some skill and investment outflow seems inevitable. A different solution would be for the colony to change its status to that of a trust territory under the United Nations, run by the present authority in Hong Kong, for a predetermined number of years. This solution is favored by The Reform Club of Hong Kong and might prove to be acceptable to China. It has the point of allowing a still-viable Hong Kong to exist while removing the colonial label and clearing up the uncer- tainty about the future length of life.

Harder for China to accept might be the renegotiation of a new lease for Hong Kong, for a limited number of years, say thirty, per-