CONFIDENTIAL
g.
18.
The experience of that phase was a sobering one for both sides. To the British it demonstrated that pursuit of the objective of continued British administration could only prolong the deadlock and might bring about the collapse of Hong Kong which it was the objective of the negotiations to avoid. On the other hand, Hong Kong was not yet ready to survive an announcement that British administration would cease in 1997. I therefore visited London with the Unofficial Members of the Executive Council, who were brought with some difficulty to accept that a new formula should be put to the Chinese. In essence this was that, without prejudice to the final outcome of the negotiations, it should be agreed with the Chinese that an examination should be made of the possibility of Britain and China together constructing, on the basis of the proposals put forward by China, arrangements which could ensure the maintenance of stability and prosperity in Hong Kong. If such arrangements could be agreed, the British Government would be prepared to recommend to Parliament a bilateral agreement enshrining them and do its utmost to help with the introduction and implementation of such
an arrangement.
19.
The experience was sobering for the Chinese too. They accused the Hong Kong Government of trying to "play the economic card" to bring pressure on them. But it brought home. to them the vital importance of maintaining the level of confidence in Hong Kong if their determination to recover Hong Kong was not to result in the acquisition of an economically devastated city. The Chinese would have been prepared to accept the risk of a disastrous collapse of confidence rather than contemplate continuing British administration. But the events of the summer and autumn of 1983 brought home to them that the objective of preserving Hong Kong as a useful entity to Ching would be unachievable without a freely negotiated agreement with the British.
/20.
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