TNAG-1746-FCO40-2465-Visits-by-FCO-officials-to-Hong-Kong-1988 — Page 38

ARPAOH

CONFIDENTIAL

BRITISH CITIZENSHIP FOR HONG KONG CHINESE BUSINESSMEN AND

PROFESSIONALS

BACKGROUND

1.

In the context of Mr Algy Cluff's proposal to set up an Anglo Hong Kong Trust to promote two way trade and investment, the Prime Minister has again expressed the view that the Government should adjust their policy on the granting of British citizenship for potential investors from Hong Kong. She proposes to discuss the matter with the Home Secretary. The Secretary of State will also need to be involved.

2.

Lord Young has recently made it clear to Lord Glenarthur that he shares the Prime Minister's view. He thought that the number of cases would be relatively small, around 50 at most, and that if we did not act soon, their money and talents would be lost to other countries.

3.

We have always taken the view that the provision of British citizenship as an inducement or reward for investment would be divisive in Hong Kong. It could also be taken as a sign of a lack of faith in the Joint Declaration and Hong Kong's future. We have argued that, given our special responsibility for Hong Kong, we were not in a position to introduce the sort of arrangements that other countries were adopting.

4. The crux of the problem is that under the 1981 British Nationality Act citizenship may be granted after an applicant has lived in the UK for at least 5 years and acquired settled status (ie indefinite leave to remain) for at least one year. He must demonstrate that he has the intention of making his home here. The maximum permitted period of absence, stipulated in the Act, is 450 days in the 5-year period. Investment offers one way of embarking on that process. The applicant has to show that he will be investing at least £150,000 (likely to go up to £200,000) in a business that may generate employment for long term UK residents. The Home Secretary has some discretion in the interpretation of the Act, but the granting of citizenship on the basis of investment a one would require a change in the law.

5.

The Immigration Rules are secondary legislation and the Home Secretary has powers to interpret them flexibly. He could, therefore, allow a Hong Kong investor to short-circuit the rules. The difficulty from the Home Office's point of view is that this would lead to demands from investors from other countries, or from other categories of people awaiting naturalisation, for comparable treatment. The Home Office are not convinced that it would be possible to interpret the rules flexibly for Hong Kong Chinese investors without indermining the world wide application of the British Nationality Act.

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