CONFIDENTIAL
7. The future of Hong Kong cannot be assured by the agreement alone. Britain will need to continue to stand up for Hong Kong's interests. The Chinese will need to demonstrate that they will refrain from interference and will respect the future autonomy of Hong Kong. There will be a need to establish a more visibly representative form of government through a process which must be conducted in parallel with the Chinese drafting of the future Basic Law for Hong Kong. International acceptance must be secured for the practical arrangements to sustain Hong Kong's autonomous status in a large number of fields. Finally, the smooth removal of the British link will be a delicate task particularly during the early 1990's when there will almost certainly be a new period of doubt and anxiety.
Hong Kong 3 July 1985
Sir
On May 27 1985 the governments of the United Kingdom and the People's Republic of China exchanged instruments ratifying the Joint Declaration on the Question of Hong Kong. The agreement was registered simultaneously by both governments at the United Nations on June 13, thus confirming their acceptance of its internationally binding nature. Under the agreement the United Kingdom has undertaken to restore Hong Kong to the People's Republic on 1 July 1997. On the same date Hong Kong will become a Special Administrative Region of the People's Republic enjoying a high degree of autonomy. Foreign affairs and defence will be reserved to the Central People's Government.
2. In his despatch of 12 November last year, Sir R Evans outlined the course of the negotiations as seen from Peking. In this despatch I propose to review the origin and scale of the problems we faced; the way in which some of the key issues were resolved; the effect which the resolution of those issues will have on future policy and the problems which will face HMG, the Chinese Government and the Hong Kong Government in implementing the agreement and in administering this territory in the period up to 1997.
3.
The problem of the future of Hong Kong has been latent since the first cession of Hong Kong Island in 1842 and of the Kowloon Peninsula in 1860. It was exacerbated by the conclusion of the lease of the New Territories in 1898 which set a term to the lease of 99 years ending in 1997. These instruments were regarded by all Chinese as part of the national humiliation which China suffered at the hands of the European powers in the nineteenth century. During that period these powers and Japan forced a series of cessions, and leases of territory on China, and secured special rights for their nationals in Chinese territory through the doctrine of extra-territoriality. Following the defeat of Germany and Japan in two world wars, and the voluntary relinquishment of other leased territories and extraterritorial rights by the other European powers and the United States, China recovered most of what she had lost. This left Hong Kong (with the tiny adjacent territory of Macao) as the sole surviving symbol in Chinese eyes of Western Imperialism.
4.
In a series of agreements beginning in 1927 and concluded by the Sino-British Treaty signed in Chungking in 1943, the British Government gave up its rights to extraterritoriality and to maintain concessions to China. To avoid alienating the British the Chinese did not insist on the return of Hong Kong at that time. In 1945 Chiang Kai-shek wished to have Chinese forces take the surrender of Japanese forces in Hong Kong. This was resisted by the British Government which
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CONFIDENTIAL
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