TNAG-1242-FCO40-1555-Future-of-Hong-Kong-1983 — Page 37

Sir Antony Acland KCMG KCVO

Permanent Under-Secretary of State

SECRET AND PERSONAL

Foreign and Commonwealth Office

London SW1A 2AH

6 October 1983

D Bowen Esq

MINISTRY OF DEFENCE

HKK 040

RECEIVED IN ALSISTRY

631

Dear Desmond

FUTURE OF HONG KONG

1.

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REGISTRY

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Action Taken

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Sir Clive Whitmore may find it helpful to be brought up to date on where we stand on Hong Kong's future, particularly in our talks with the Chinese.

2. As you will know, a second phase of more detailed talks began in Peking in July. There were two sessions that month, another in August and a fourth on 22/23 September. The fifth round will be held in Peking on 19/20 October.

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3. The Chinese are taking an increasingly tough line in the talks, particularly on the indivisibility of sovereignty and

administration. They insist that they will take back control in 1997 and have said as much publicly. They have also said, both in private and publicly, that unless an agreement is reached a year from now they will make a unilateral statement on the future setting out their own plans for Hong Kong. They are carrying out an intense propaganda campaign aimed at convincing the Hong Kong people of the inevitability and viability of their plan to make Hong Kong a Special Administrative Region of China and at forcing us to make concessions in the talks. So far its main effect has been to weaken confidence in Hong Kong and to cause considerable pressure on the Hong Kong dollar. It is clear that we are now approaching a critical stage.

4. Mr Luce's recent visit to Hong Kong enabled him to have detailed discussions with Hong Kong's Executive Council as well as with the Governor and our Ambassador who was over from Peking. The Unofficial members of the Executive Council, together with the Governor and the Ambassador, are in London now to continue their discussions with Ministers here. It is too early to say what line will emerge for use by the Ambassador at the next round of talks but we are looking very carefully indeed at our position. EXCO's visit is an important stage in this process.

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SECRET AND PERSONAL