TNAG-1243-FCO40-1557-Future-of-Hong-Kong-1983 — Page 79

2. THE SOURCE OF THE INFORMATION IN THE ARTICLE S DESCRIBED AS A WELL KNOWN PERSON NEWLY APPOINTED TO THE CPPCC. ACCORDING TO THE SOURCE, BRITAIN HAD AT FIRST INSISTED ON RETAINING SOVEREIGNTY, IN THE HOPE OF RETURNING THE NEW TERRITORIES TO CHINA IN 1997, BUT REMAINING IN CONTROL OF HONG KONG ISLAND AND SOUTH KOWLOON. LATER ON, BRITAIN PROPOSED TO RETURN SOVEREIGNTY TO CHINA IN ACCORDANCE WITH THE WISHES OF HONG KONG RESIDENTS' WHILST

RETAINING ADMINISTRATIVE CONTROL. THIS WAS ALSO REJECTED BY CHINA,

THE DEADLOCK IN THE TALKS LED TO THE CRISIS IN THE STOCK AND FORSIGN EXCHANGE MARKETS OF LATE SEPTEMBER. THE GOVERNOR AND EXCO MEMBERS HAD TRAVELLED TO LONDON TO TELL THE PRIME MINISTER THAT BRITAIN

SHOULD NOT INSIST ON RETAINING ADMINISTRATIVE CONTROL, BUT THAT THE

BRITISH GOVERNMENT SHOULD SEEK TO RETAIN A SUBSTANTIAL BRITISH

PRESENCE AND THE RULE OF LAW. AS A RESULT THE ATMOSPHERE OF THE

TALKS IMPROVED GREATLY DURING THE 19-20 OCTOBER ROUND. ACCORDING

TO THE SOURCE CHINA WAS INSISTING THAT ANY BRITISH OFFICIALS RETAINED

IN HONG KONG SHOULD OWE ALLEGIANCE TO THE HONG KONG SAR AND NOT THE

QUEEN.

3. ON CONFIDENTIALITY, THE SOURCE IS QUOTED AS SAYING THAT THIS HAD BEEN DEMANDED BY THE BRITISH. THE CHINESE SIDE HAD USED

A VARIETY OF SEMI-OFFICIAL CHANNELS TO SPREAD THEIR IDEAS ON THE

RECOVERY OF SOVEREIGNTY AND ADMINISTRATION RIGHTS: BUT THERE WERE ONLY THREE PEOPLE WHO SPOKE OFFICIALLY FOR THE STATE, LI XIANNIAN, DENG XIAOPING AND ZHAO ZIYANG.

4. THE SOURCE WAS ALSO QUOTED AS DESCRIBING IN SOME DETAIL THE PROBLEMS OF IMPLEMENTING THE SELF-RULE FORMULA. THE FOUR

POINTS OF MOST CONCERN WERC:

(A) HOW SHOULD THE HEAD OF GOVERNMENT BE SELECTED.

(B) WHAT WOULD BE THE LEGAL STATUS OF THE HONG KONG

SPECIAL ADMINISTRATIVE REGION.

(C) WHAT WOULD BE THE FUTURE ROLE OF LEFTISTS IN HONG KONG.

(D)

HONG KONG'S FUTURE INTERNATIONAL RELATIONS.