TNAG-1896-FCO40-2690-Calls-on-Francis-Maude--Minister-of-State-for-Foreign-and-Co-1989 — Page 52

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to the contrary, what else can Hong Kong do besides contemplating a larger outflow of people every year and a lessening of its competitive position in the world markets? We could of course try to channel the speed and the course of emigration by an organised concurrent effort at diversification of investment overseas. To a certain extent this is happening already but clearly on a sporadic basis involving relatively small numbers only. But this tendency could grow, particularly should risk/reward ratios in Hong Kong be perceived as no longer so different from other locations. Still, these would remain acts of relative commercial desperation.

There is of course one other alternative. At the risk of being attacked as eccentric or utopian, the present situation suggests that the idea should be aired again. While it was quite inconceivable for the United Kingdom to be able to argue successfully in 1982 for an extension of the Hong Kong treaties, now that the principle of a return of the Territory to China in 1997 has been internationally agreed and ratified, it might be possible to discuss a new lease, by Britain, of the Hong Kong SAR for an agreed period after 1997. The property rights would clearly pass to China but possession would be retained, and sovereignty would be transferred as agreed in the Sino-British Joint Declaration, but immediately delegated back to the British Government. Confidence among the people would be re-established and they can stay where they all profess they would much rather live. Hong Kong would buy time for domestic political reforms, deferred so long for various historical reasons, and which could be something less of an experiment or a shot-gun wedding they now look like becoming. China would have more opportunity to develop on her own road towards modernisation without being concerned about Hong Kong taking too much of an interested part, while increasing the chances of retaining Hong Kong's extraordinary and proven ability to assist China's economy. Both sides would gain the opportunity to bridge the gap between the "two systems" which, as recent events have shown, remains a substantial gulf casting grave doubts about the practicality of the whole concept at this quite early stage of the proceedings.

The rental for the new Hong Kong lease would need to be negotiated as in any commercial transection. Clearly China will wish to nave an advantag from an agreement to leave Hong Kong under the wings of the Bricsn Government for a while longer, and one that goes beyond what Hong Kong would otherwise deliver by way of benefit to China after the transition. Would a billion Pounds per annum be a reasonable figure? Of course the