TNAG-2714-FCO40-3920-House-of-Commons-Select-Committee-on-Foreign-Affairs-enquiry-1993 — Page 188

THE FOREIGN AFFAIRS COMMITTEE

xvii

guarantee a high degree of autonomy, it is necessary that, where there is an irreconcilable conflict between the Legislative Council and the Chief Executive, the Chief Executive should resign. Only by making the Legislative Council sovereign can the people of Hong Kong be confident that the Hong Kong SAR will have “a system of government, the authority for which is firmly rooted in Hong Kong," and which reflects the promise of a high degree of autonomy made in the Joint Declaration.

IV. BRITISH POLICY AND ACTIONS

British Interest in Hong Kong

4.1 The pace and scale of Hong Kong's economic development over the last twenty or thirty years has been breath-taking. Despite political upheavals in mainland China, war in Vietnam, two oil crises, and a major world recession, Hong Kong's economy has grown and its prosperity has increased. It has been estimated that the economy is now fifteen times bigger than it was in the 1950s, and that output per head has increased sixfold. Its geographical position makes it the natural hub of the rapidly expanding South-East Asian and Pacific Rim region and the gateway to the potentially huge market of mainland China. It is also an international financial centre, well placed between the American and European time zones. Foreign investment in Hong Kong is rising: British, American and Japanese investment being at record levels. Much of this investment has a payback period stretching well beyond 1997.

4.2. To what extent, however, does Hong Kong matter to basic British interests? When posed in Hong Kong itself, such a question can sound cynical, and, at the least, insensitive after the events in Tiananmen Square. It is nevertheless an issue which has to be faced squarely at Westminster, where, until recently, Hong Kong has sometimes been portrayed as a remote place, attracting only limited interest, and bringing few immediate benefits to the British economy. Indeed in some quarters, for example the textile industry, Hong Kong is seen more as a trade threat than as an area of major British interests whose decline would be directly damaging to us. Others have even argued that Hong Kong can be a distraction at a time when British efforts could more effectively be concentrated on Beijing.

4.3. We outline these arguments, not because we agree with them, but in order to refute them. It is not just that British investments in Hong Kong are very large and growing (contrary to the popular illusion in Hong Kong that British economic interests are somehow withdrawing). The whole region, is of ever-expanding economic significance. Hong Kong, Taiwan and the other rising economies of the Pacific Rim are major sources of capital and inward investment into the UK and the rest of the European Community. The recent traumatic events in China may well set back China's own development, and will certainly dislocate the process of its integration into the international community, but we do not believe that China will wish to, or indeed will be able to, close the door again to the outside world. To be on good terms with the people of Hong Kong, who sit, as it were, on the doorstep of China, and to hold their respect, is vital to future British interests, even when defined in these narrow business terms. It is our view therefore that the progress and prosperity of Hong Kong is of enormous importance to the United Kingdom and to British interests.

Nationality

4.4 Nationality is undoubtedly the single area of British policy towards Hong Kong which causes most bitterness. It has been a matter of controversy in Hong Kong ever since the Commonwealth Immigrants Act 1962 (see below). Recently it was further inflamed when the Macanese authorities started issuing EC common format passports to Chinese Portuguese citizens in Macau. As the Minister of State at the Home Office, Mr Renton, explained to us in evidence,3 the history of British nationality law has followed a very different path from that of Portugal, and one which was largely dictated by domestic political considerations. There are currently estimated to be some 3.28 million Hong Kong residents who are British Dependent Territory Citizens (BDTC) "by virtue of a connection with Hong Kong". Hong Kong BDTCs have not enjoyed a right of admission to, or settlement, in the UK, free of immigration controls since the 1962 Commonwealth Immigrants Act. The Immigration Act of 1971 defined the

• White Paper on the Further Development of Representative Government in Hong Kong, November 1984. 2 Evidence p 38.

* Q 789.

• Evidence p 8.