TNAG-1411-FCO40-1887-Future-of-Hong-Kong--Hong-Kong-a-Change-of-Destiny---despatc-1985 — Page 37

CONFIDENTIAL

FOREIGN AND COMMONWEALTH OFFICE

Hong Kong Department

HKK 040/37

DD 1985/304

DESPATCH

General Distribution

Hong Kong

3 July 1985

HONG KONG: A CHANGE OF DESTINY

The Governor of Hong Kong to the Secretary of State for Foreign and Commonwealth Affairs

SUMMARY

The problem of the future of Hong Kong has existed since the first cession because all Chinese have seen it as part of China's national humiliation in the 19th century. In insisting on a British return in 1945 the UK accepted an inescapable responsibility towards the Hong Kong population which, given the existence of the lease expiring in 1997, could not be discharged by the grant of independence.

2. The problem grew substantially more complex after 1949 when China and Hong Kong moved, politically and economically, in diametrically opposite directions.

3. Chinese acquiescence in the continuation of British administration after the Civil War, during the Korean War and during the Cultural Revolution indicated that Hong Kong was an asset which China wished to preserve.

4.

During the long and complicated negotiations the first objective had to be the continuation of British administration because that is what the population wanted. But pursuit of that objective led to deadlock and a financial crisis in Hong Kong in the autumn of 1983. The financial crisis was avoided only by the successful introduction of a link between the Hong Kong dollar and the US dollar.

5. A number of people in Hong Kong, particularly the Unofficial Members of the Executive and Legislative Councils, stood up bravely for Hong Kong's interests. Without their courageous advocacy there would not have been such a good agreement.

6. In the final stages of the negotiations there were a number of difficult hurdles. One was to prepare the Hong Kong community for the prospect that the agreement would not provide for the continuation of British administration after 1997. Another was to bring the Chinese to accept that a unilateral declaration of their intentions would be insufficient: any agreement had to be internationally binding. A third was to ensure that the establishment of the Joint Liaison Group would not result in a form of “creeping condominium” undermining British administration over the next 12 years. The fourth was to show that the agreement was acceptable to the people of Hong Kong.

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CONFIDENTIAL