CONFIDENTIAL
6. Ready to co-operate very closely with Chinese Government to put agreement into effect. Attach particular importance to Joint Liaison Group as forum for liaison and consultation. Shall work with you within group to maintain Hong Kong's position in world trading system; to ensure continued application of international rights and obligations affecting Hong Kong; to help bring about smooth transfer of government in 1997.
7. Important work ahead. If agreement to work, task of particular importance will be drafting of Basic Law. Will have to be very closely attuned to circumstances of Hong Kong, and command confidence of people who live and invest there.
8. Our Governments agreed that until 1997 Britain will have full responsibility for Hong Kong. Can give you personal assurance, as Sir Geoffrey Howe did in July, that it will be administered prudently and with foresight, in best interests of Hong Kong people.
DEFENSIVE (IF RAISED BY DENG XIAOPING)
Administration of Hong Kong in the transitional period
9.
Has no
Britain derives no direct revenue from Hong Kong.
intention of doing so in next 12 years. Hong Kong's budget and exchange fund will be administered by Hong Kong Government, for benefit of Hong Kong as now. Sound and cautious financial management for which Hong Kong is well known will be maintained. Britain's overriding objective to maintain health of Hong Kong's economy and stability so that it can pass through transition to new status as smoothly as possible, without weakening of confidence or
flight of capital.
CONFIDENTIAL
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