Hong Kong: Future

HL Deb 21 May 1984 vol 452 cc101-31

9.26 p.m.

Lord Fanshawe of Richmond rose to ask Her Majesty's Government what is their current approach to the negotiations with the People's Republic of China on the future of Hong Kong, in the light of the recent visit by the Foreign and Commonwealth Secretary to China and Hong Kong?

The noble Lord said: My Lords, I beg leave to ask the Question standing in my name on the Order paper. The reason I have raised this problem this evening is the need felt by many people that your Lordships' House should make some comments on the situation which now faces the people of Hong Kong following the lengthy negotiations, which are still continuing. between Her Majesty's Government in the United Kingdom and the People's Republic of China. The thoughtful and sensitive debate in another place last week, about which we have read, underlines the need for this House also to put forward its views.

All parties and all Members of both Houses of Parliament here at Westminster wish to show the People's Republic of China and the people of Hong Kong our deep concern for the future of the territory. At least 10 noble Lords have put down their names to speak to this Unstarred Question, which underlines the point I have made. I am particularly glad that the noble Lord, Lord MacLehose of Beoch, will also be speaking. He is an old personal friend of mine and everybody who knows Hong Kong will be well aware of the fact that he was not only the longest-serving Governor of Hong Kong but also, in my view and in the view of most people who know Hong Kong, the greatest. most far-sighted and most successful Governor that Hong Kong has had during its 142 years of history.

My interest stems from the occasion when I visited Hong Kong for the first time 22 years ago, as a young Member of Parliament in another place, and as Parliamentary Private Secretary to the Secretary of State for Air. I was fascinated at the time by the extent to which and the speed at which the then colony of Hong Kong was developing. And I was surprised and rather shocked at the lack of interest in that dynamic place that I found here at Westminster.

Soon after, I formed the Anglo-Hong Kong All Party Parliamentary Group. I became its first chairman, and I remained chairman for six years until 1970. In 1970 I was honoured to be made a Minister at the Foreign Office after the general election, with responsibility for Hong Kong.

Soon afterwards I commenced negotiations for the exchange of ambassadors between Great Britain and the People's Republic of China. These negotiations were concluded at the end of 1971 and I flew to Peking in June 1972 as the first Western Foreign Office Minister to visit the People's Republic of China since the revolution which took place in 1949, and I signed the agreement in Peking at that time.

I think my few words will indicate my interest and my concern for the future of Hong Kong. Of course, there must be many doubts in Hong Kong at present. I know from experience, having been in Hong Kong and Macao at the time of the cultural revolution in 1967, and having seen what occurred during that unfortunate period, that there are understandably deep worries and that different ideas—some realistic, some not so realistic—are being put forward at present. No one likes change. I suspect there are one or two noble Lords in the Chamber this evening who would prefer not to see changes of any kind taking place—not just in Hong Kong or the Far East but perhaps in their own personal lives or in this Chamber as proposed by some people outside.

I should like briefly to make a few points and to put forward a few thoughts at a time which I realise is extremely difficult and sensitive in the negotiations now taking place. Mr Chi Peng-Fei, who is leading the ministerial team in China at present, was Foreign Minister of China at the time I was in the Foreign Office, and I grew to know him quite well. Indeed, he visited my house in the country in England. I hope that he and his team will listen carefully and take into account the views expressed here by noble Lords tonight and the views expressed last week in the other place.

The time-scale of these negotiations is very tight. The impression at the moment is that the Chinese Government would like to see these negotiations finished by September. I ask my noble friend whether she will comment in her reply on the fact of the parliamentary timetable, which, as all of us know in this Chamber, entails both Houses of Parliament rising for the summer Recess at the end of July and not returning until October. This will inevitably make it impossible for Westminster to give its opinion—its very important opinion—on whatever agreement is reached.

It is very important that the right agreement is reached. That agreement must be right and workable if it is to function in Hong Kong and, from the point of view of the People's Republic of China, it may be that this agreement could be a guideline for use in other negotiations affecting other areas, not necessarily Hong Kong, that they might have in years ahead.

I believe that this agreement must be set out in great detail in order to create that confidence which is necessary for any such agreement to work. I certainly wish to he satisfied that aspects covering security and finance are fully covered in addition to other aspects such as the law, freedom of religion and freedom of speech which have been mentioned in the debate in another place and will no doubt be mentioned by many of your Lordships tonight.

We in the United Kingdom and, I believe, Her Majesty's Government, have already made clear the determination of the British people and their Government to fulfil our moral obligations to the people in Hong Kong. In that context, I should like to pay tribute to the members of the delegation of unofficial members of EXCO and LEGCO who have been in London during the past few days. I believe that this delegation has cleared the air. Some of them are old friends of mine who I have known for many years. They and their predecessors over the past 20 or 30 years, in giving their time and their effort, have managed to help and guide successive governors and the people of Hong Kong into the development that has taken place today.

A few honourable Members in another place, in my view, were casting quite unwarranted aspersions upon this delegation in the debate last week. I do not believe that in any way any of us—certainly in this House—would wish to cast aspersions on their good faith and hard work. Their views may be controversial, but that is the stuff of politics. That is what it is all about. We are now trying to seek a way forward. Inevitably certain views given and put forward by some people may well be controversial.

We must all try to achieve a realistic outcome to these talks. Although noble Lords in this Chamber are not involved in the day-to-day discussions or the detail of the negotiations (which are of course a matter for governments), I personally feel that we should try to strengthen the democratic representative structures within Hong Kong.

At the same time, I should like to put down a warning that such representative structures, unless devised with great care, could entail dangers and strains, with the establishment of political parties from the extreme left to the extreme right and with all the pressures and difficulties that could follow and the spill-out on relationships with the People's Republic of China over the last few years of the lease.

What is on offer? What is on offer is a remarkable new idea. It is a remarkable solution—that is, two different political systems working side by side in one country. Many of your Lordships will, I know, have visited some of the new economic zones which have been set up along the borders of the People's Republic of China. I myself visited the economic zone of Shen Zen, which is now working and working quite successfully, but this is an economic free enterprise zone within the political ambit of China. What is now being put forward is both a political and an economic zone, which will be a political system and an economic system very different from those in other parts of the Chinese People's Republic. I believe personally that that is an imaginative and workable concern, provided that all the details are fully worked out.

What is our strength in this negotiation? Nothing in international life and international affairs will guarantee that any agreement reached between nations is kept to. There is no one who can produce that sort of guarantee, but there are two aspects which I think strengthen our arm in these negotiations. As was said in the other place, China, under many different régimes, since 1911 has never breached any international treaty. It has never breached any of the treaties made with us over Hong Kong, even though it did not recognise those treaties and maintained that it was forced to sign them. Therefore is it not unlikely that there will be a breakdown of a new agreement freely negotiated now. even though the present regime may change in the years ahead, even though the men in Peking may be different in 10 or 20 years' time from the people who are there today?

The second strength is the great, invisible trading assets of Hong Kong; the confidence; the skill; the working people—the Chinese people who have built up Hong Kong to be what it is today under the guidance and leadership of devoted British officials. If this is dissipated, Hong Kong will no longer be Hong Kong as it is today: it will become a desert. That will not be what Peking—or Beijing, as it is now called—would wish to see. Therefore it is not in Beijing's interest nor in Hong Kong's interest nor in Britain's interests to see these discussions fail.

Perhaps I should say that we should be careful of doubting the sincerity of those with whom we are negotiating. There are great dangers in this. If you are going into a negotiation, whether it be a business negotiation or a political negotiation, and if you start by doubting the sincerity of those to whom you are talking, you may as well pack up and not even start the negotiation at all.

So in conclusion, the views expressed tonight will be studied in great detail in Beijing and Hong Kong. I have no doubt that during the talks our negotiators, led by our ambassador in Beijing, a very skilful expert on China. Sir Richard Evans, helped by Sir Edward Youde, the Governor of Hong Kong, will mix care with their realism, never forgetting our commitments to the people of Hong Kong.

9.42 p.m.

Lord MacLehose of Beoch

My Lords, it is a great pleasure for me to follow the noble Lord, Lord Fanshawe, with whom I had the honour of working when he was Minister responsible for the Foreign Office and I was Governor of Hong Kong. I do not remember disagreeing with him often then. I certainly do not disagree with anything he has said tonight, with the exception of what he has said about myself.

I am certainly very pleased that he has set down this Unstarred Question because it gives us an opportunity to comment on the Government's approach to the future of Hong Kong as set out in the Foreign Secretary's statement, first in Hong Kong and then in another place on 16th May. I should like to say straight away that I think he was absolutely right to say that the concept of British administration after 1997 was now unrealistic. Palatable or unpalatable, it was an inescapable conclusion. Now it leaves those concerned to concentrate on defining alternative arrangements which both Governments believe will be realistic and which will allow everyone to know what their future prospects are.

It was most remarkable and helpful that it was the Chinese Government itself, which, from the outset. recognised that the object for successor arrangements in Hong Kong should be continuity, that it should be managed quite differently from the rest of China and that the essentials of present systems and freedoms, including the capitalist system. should be maintained.

The Foreign Secretary defined very well what these essentials are. While a great deal will depend on the detail contained in the eventual agreement, surely we can welcome the objectives towards which both governments are working. Nevertheless, a great many people in Hong Kong are deeply worried about their future. We have had a visit of the unofficial members of the executive and legislative council to explain to us what they believe these worries are. I should say that in the circumstances I think it was their clear duty to do this. I associate myself with everything which the noble Lord, Lord Fanshawe, has said about them. I personally am deeply indebted to many of them.

It is very important that these worries of the people in Hong Kong should be met, so far as possible, by us, by the Chinese Government, or by the Hong Kong Government, or by an adjustment of attitudes of the people in Hong Kong. I suggest that for our part first we can do our best to ensure that the agreement which will be signed between Britain and China contains sufficient detail for future arrangements to be clear. I feel sure that this is exactly what we are doing.

Surely, the Chinese Government, too, will accept the importance of including in an agreement the detailed implications of the very imaginative ideas that they have put forward. Secondly, people in Hong Kong want to be sure that the arrangements will last. Chinese leaders have said that they will last for at least 50 years after 1997 and it is, of course, very important that this, too, should be included in the agreement. But additionally there is concern that the basic law which will eventually define Hong Kong's administration under the constitution of China may detract from the arrangements in the Sino-British agreement. The Secretary of State has spoken of a binding international agreement. It would be helpful if the noble Baroness, the Minister of State, would confirm that we have no reason whatever to anticipate that the provisions of the basic law will breach the provisions of the agreement.

Many people in Hong Kong are anxious to obtain assurance piled on assurance about their future. This is understandable and for historical reasons that are well known. But I am afraid that the assurance that an international agreement can ever provide cannot be entirely complete whether in this case or any other. However, one can say that there is every prospect of this agreement holding up—and this is for a very wide variety of reasons so well put in the debate in another place that I will not repeat them tonight. although the noble Lord, Lord Fanshawe, did refer to one very important aspect.

Secondly—and I must say this—a chorus of distrust from Hong Kong would be the worst possible approach to the future. After all, its success is inextricably bound to a close, positive and, I should hope, productive relationship with the Chinese Government. Some people in Hong Kong would say, "Very well. We will work on the best assumption, as you suggest; but where can we go and who will be responsible for us, should we try to go there if things go wrong?" It is very important that the community of Hong Kong should stick together during the run-up to 1997 determined to make a success of the future as it has of the past. For my part, I think that people are more likely to stay in Hong Kong and not to leave if they have some assurance, first, that they will be free to leave, if leave they must, and, secondly, that Her Majesty's Government will do their best to ensure that the effective rights that holders of British dependent territories citizens' passports now have will be no less after 1997 than they were before.

We may think these contingencies too remote to consider at this stage, but they seem much more immediate to people in Hong Kong. I do not expect the noble Baroness, the Minister of State, to cover these matters tonight, but I ask her to note that, on these questions, something from the British Government could make an enormous difference to maintaining confidence at the time the agreement is published, as we hope it will be, later this year. Far from inviting an exodus, I believe that it would go a long way to forestalling it.

Moreover, one must remember that in the interval between 1984 and 1997 a great deal will become clearer to people in Hong Kong, and indeed here. The Chinese Government and their actions in and about Hong Kong should provide the best possible proof that current fears are groundless—if, as I believe, groundless they are. Meanwhile, I urge the Hong Kong people, and in particular those in the public services which are so vital to continuity, to wait and see how things develop and not to be panicked by rumour or instant commentators into attitudes or assessments that must be premature and in all likelihood will be proved baseless. Much now depends on the good sense and determination of the people of Hong Kong and their unofficial leaders. They can talk themselves into despair and self-defeat or, as I am sure they will do, overcome their anxieties and uncertainties to build firm foundations for their own future.

I am sure that the Secretary of State was right in foreseeing a move to a more representative Government in Hong Kong. The local talent in the public services and among unofficials is there in abundance. The machinery and practice of an electoral system based on adult suffrage are also there. The power and influence of both can be increased in whatever way and at whatever speed the Hong Kong Government think best. To steer Hong Kong through the transitional phase, a more obviously representative Government could well be a great help.

Hong Kong is one of the most productive communities and best situated harbours and pieces of real estate in the world. It has a population second to none, very well able to run its own affairs, and a history of great economic success and rapid technological advance. If the principles of the present approach can be embodied successfully in a satisfactorily detailed agreement, I have no doubt that the combined sense of the Chinese Government and of the people of Hong Kong will ensure that the future is as successful as the past.

9.52 p.m.

Lord Kennet

My Lords, I speak with the utmost modesty and trepidation after the speeches by the noble Lords, Lord Fanshawe and Lord MacLehose: Lord Fanshawe with his own individual experience of those crucial phases which he himself handled back in the early 1970s, and Lord MacLehose, than whom no man in this country knows more about Hong Kong or is better qualified to give an opinion about the most likely way of getting through the next 63 years to the satisfaction of all parties concerned.

First of all, on behalf of all my colleagues on these Benches I should like to endorse heartily what the noble Lord. Lord MacLehose, has said by way of words of advice—not that we are entitled to give it; he is—to the people of Hong Kong in the meantime. China has been in a state of virtually uninterrupted revolution or revolutions since the middle of the nineteenth century, and since 1911 has been engaged in an uninterrupted progress of recovering bits of Chinese territory which were taken from it under the so-called unequal treaties. It is important that the British Parliament and people should bear this in mind.

We know Hong Kong as a fabulously successful little British colony with an enormous Chinese population which somehow or other—we do not quite know how—came to be under our rule and turned into an economic miracle. The Chinese Government and people know it as the last of the territories which were taken from them by European invaders, in our case as the fruit of burning down quite a sizeable bit of their capital city. When we speak of an unequal treaty we ourselves must think how unequal we would consider it if somebody had taken a hit of England from us after having burned down Buckingham Palace and Windsor Castle. We should consider it unequal even a hundred years later; and that is the fact for them.

What sets the framework of our present possibilities is the fact that 92 per cent. of the territory of Hong Kong—though not, of course, 92 per cent. of its population; far from it—is the subject of a contract between the Chinese and British Governments. It is a lease which, like any other lease, is no more than a contract between people or peoples, or nations, and that lease terminates in 1997. There is nothing unequal about it; or, rather, there was something unequal about the way in which it began, but there is nothing equivocal about the way in which it is to end. We have always agreed; we signed on the dotted line. It ends in 1997.

That will leave 8 per cent. of the territory, although much more of the population, which was taken as a result of the European invasions and colonisations of China. All the others, with the exception of Macao next door, have long since (many from the 1930s and before) been rectified from the Chinese point of view. It is impossible in the case of the lease of the new territories to change the ending date. It is impossible in the case of Hong Kong Island itself to look beyond 1997 for British rule in terms of a simple movement of world history, and one which is understood and endorsed as fully by those people in this country who know what is happening as it is by the people of China.

In the meantime there is the question of political and economic confidence, and we must be careful what we do about that. I suppose that in the last few years the two matters which have shaken it the most have been, first the Prime Minister's speech in Peking in 1982, when, flushed with the Falklands victory, she seemed for a moment to have lost sight of the difference between the Falkland Islands and Hong Kong. Secondly, there was the recent decision of Jardine's to transfer their centre of operations elsewhere. We must deplore them both, but to the extent to which we deplore the former at least, we can only welcome the unglamorous but extremely useful and effective performance so far of the Foreign Secretary in pulling the Prime Minister's chestnuts out of the fire. Who wants to be glamorous when he can be useful? And that, I submit, is what the Foreign Secretary has been in recent months.

The question arises: what will be the relation between the installation or introduction of democracy in Hong Kong after 1997 and the maintenance of political and economic confidence and stability there during the same period? That is not a very easy question to answer. I repeat: we can only admire the skill with which Sir Geoffrey Howe has so far been speaking about it, and hope and express our confidence that what he is actually doing about it (which is unknown to us) is as skilful as what he is saying about it.

We have had two delegations: one delegation was from the unofficial members of the Executive and Legislative Council; and the other delegation was from the Hong Kong Federation of Students and others. Those delegations have been to London in the last few weeks. I should like to echo what has been said. We in the Alliance are extremely glad to have had the opportunity to meet both delegations and to hear their views. It is not only the right but probably the duty of those people, as the noble Lord. Lord MacLehose, has said, to come here and tell us how they analyse the situation, and what they want.

In favour of a rapid and far-reaching introduction of democracy is the fact that it would avoid the danger of Britain handing over the sovereignty of an unopened package to China in 1997. Nobody really knows with certainty what are the wishes and intentions of the people of Hong Kong for themselves under the new dispensation. They can only be ascertained—and we discovered it ourselves in the 17th century—to the satisfaction of British people, at any rate, by the introduction of a measure of directly elected representative democracy. On the other hand, the rapid and far-reaching introduction of that would appear to carry certain dangers with it, particularly the penalty of a possible resurgence of doubts in Peking, which could happen quickly if the exuberance of a newly or too rapidly introduced democracy were to become overvisible and overworrying to everybody concerned, to all three parties: to the people of Hong Kong themselves, to the Government of China and to the Government of this country. Therefore, it seems to me obvious—and I imagine that it is even more obvious to the Government—that the introduction of democracy must be by stages which carry at least the tacit agreement of Peking, if not the explicit agreement. The latter should be preferred if it is possible to obtain it.

I shall not press the Minister of State to confirm this, but we understand that it is already in the bag between Britain and China that Hong Kong should form a kind of extra-special enterprise zone under, or related to, Article 31 of the Chinese constitution, and that there should be passport and customs control at the frontier between Hong Kong and the existing special enterprise zone, which constitutes the present frontier of Hong Kong. We understand that for 50 years the people of Hong Kong, while forming part of China, would be allowed and encouraged to continue their present legal system and their present economic system, and that there should be some form of words which vaguely expresses their present way of life, whatever that is. But if it comprises both legal system and the economic system, that is coming very close to saying, "way of life". We understand that the Chinese phrase is that Hong Kong would be "a separate entity", and another Chinese phrase is that there would be "two systems within one nation".

I imagine that the House would also hope that we can get separate or in some way distinct or semi-distinct Hong Kong membership of various international organisations: first, GATT, which we understand China herself is joining; as well as GATT, the IMF. the World Bank and the Asian Development Bank; and, perhaps most important of all, the Multi-Fibre Agreement. If it cannot have separate or distinct membership of the Multi-Fibre Agreement, then perhaps it can at least have a kind of inflected Chinese membership. If the convertibility of the Hong Kong dollar can he guaranteed well in advance of 1997 to be maintained thereafter, no doubt that would also perform wonders in easing the transition of sovereignty.

Mention has been made of the problems of emigration from Hong Kong after 1997. There are problems, and they are extremely complicated, and by anything I say I do not wish to exacerbate them. But I should like to mention that it is displeasing—and I do not know what the remedy is—to know that in the Hong Kong press at the moment advertisements are appearing for Hong Kong people to emigrate to various countries in exchange for a certain specified capital investment in the economy of those countries. We read that the figure for Canada is a quarter of a million dollars, and that the figures for a whole raft of other countries, going downhill from that, end up with Haiti at something like a tenth of that figure.

This is surprising and disquieting to learn. I do not know the answer, but at all stages we should remember that the Hong Kong population, though immensely successful economically, does nor consist entirely of rich people. It was also disquieting to read the remarks of one Government supporter in the House of Commons the other day who said that precisely the same thing should be done by this country. I think we would all agree that the Commons debate last week, which also took place late in the evening, was an extremely helpful one for the Government. It was clear that every speaker intended to be helpful to the Government, and in my amateur judgment they probably were. I am sure that what has taken place so far tonight, the first two speeches, will also be helpful to the Government, and I believe that our debate as a whole may be. I am sure that I speak for every Member of this House when I say that that is our intention in speaking tonight.

The tripartite enterprise of devising a future for Hong Kong—tripartite between the people of Hong Kong and its Government, the Chinese Government, and the Parliament and Government of this country—must be an extraordinarily taxing one for the Foreign Secretary and his colleagues. They are dealing quite simply with the peaceful transfer of sovereignty over a population which shares our economic system but not our race, to a nation which shares their race but not their economic ideas or system. It will be a great achievement by all three Governments if it can be done successfully. Let us hope that we shall be able to continue over the next two generations to note, as we can note tonight, that it is being done successfully.

10.6 p.m.

Lord Rhodes

My Lords, we are indebted to the noble Lord, Lord Fanshawe, for raising this subject on an Unstarred Question tonight. It is an important one. In rising to speak I wish to make it clear that much of what I am going to say represents the views of my noble and disappointed friend Lord Kadoorie, who has come all the way from Hong Kong to speak but unfortunately has not taken the Oath in this Parliament, without which it is impossible to sit and speak in your Lordships' House. Much of what he had to say is being said through me.

So much has been said and written about Hong Kong over the past few days that it is difficult to avoid repetition. Consequently, I shall confine my remarks to two points where further clarification might be useful. We are all aware of the recent visit to England of UMELCO from Hong Kong, but it is as well to redefine the meaning of this word. UMELCO stands for Unofficial Members of the Executive and Legislative Councils of Hong Kong. As unofficials they are to be contrasted with the officials who sit alongside them in the colony's ruling bodies; the executive council, akin to a cabinet, and the legislative council. similar to Parliament. While the officials are civil servants, the unofficials are members of the public appointed to public office by the Governor. They are the nearest thing Hong Kong has to Members of Parliament.

Members of UMELCO, though not elected in the sense that this word is understood in England, are in close contact with all sections of the community and have no hesitation whatever in expressing both the minority and majority views of their constituents. They sit on no fewer than 300 committees and are able to gauge opinion at all levels. Their honesty of purpose and devotion to Hong Kong and its welfare cannot be questioned. Perhaps what is more important in the context of the future survival of Hong Kong as we know it is their personal association with industry, their knowledge of world markets, their power to create work and, with it, prosperity.

The second point on which there could be misunderstanding is that the 2.5 million people of Hong Kong with British dependent territory citizenship would all wish to emigrate to the United Kingdom before the 1997 deadline.

This is far from being the case. The vast majority of Chinese living in Hong Kong have neither the means nor the inclination to leave their homes to settle elsewhere. There is no question of an invasion of the British Isles by a Hong Kong "boat people". Hong Kong well knows the burden of overcrowding and all that this entails, and has no intention or desire to add to the problems experienced in this country. All that the Hong Kong British are asking for is the retention of those basic freedoms inherent in a British constitution—freedom of thought, freedom of speech, freedom of choice, freedom to work and freedom of movement.

Upon expiry of the lease, when Hong Kong is no longer a British dependent territory, those ethnic Chinese who so wish will no doubt be able to obtain a Chinese passport: but what of those who are naturalised and the many expatriates born in the Far East who hold Hong Kong passports and who will be left stateless? Surely the United Kingdom owes them the freedom of movement and protection available to British subjects in all parts of the world. Perhaps a compromise sufficient to satisfy the United Kingdom immigration authorities could be found by allowing holders of British Hong Kong passports to have a separate passport which would give them the full protection of a United Kingdom passport anywhere in the world, except that the holder would have to obtain a visa if he wished to come to England, and a work permit if he sought employment in this country. Such a passport could be limited to the 50-year transition period promised by the Chinese.

My Lords, you have all had a copy of the statement issued by the Unofficial Members of the Hong Kong executive and legislative councils, "The Future of Hong Kong". I fully appreciate their contention that Parliament may cede sovereignty over the Territory, but it cannot by the same Act deprive British nationals of their national status. They expect, with good reason, Parliament to honour its moral and legal obligations to the 2.5 million British passport holders which declare them to he British Hong Kong in international law. Hong Kong belongers are citizens of a British dependent territory now destined to become a special autonomous region of the People's Republic of China. Britain has pledged that no agreement will be signed unless it can be commended to Hong Kong people as a internationally registered agreement that assures their stability.

The Chinese Government have repeatedly stated that Hong Kong's life-style will continue, and that they wish existing systems and freedoms in Hong Kong and the free market economy to remain fundamentally unchanged for at least 50 years after 1997. However, we must remember that we are living in an era of rapid change where flexibility is essential. In such a climate it is not realistic to think of an agreement that provides for continued British administration in Hong Kong after 1997, and in these circumstances—and particularly before the contemplated devolution of power from the Central People's Government to the Hong Kong special administrative region via a basic law to be promulgated in the early 1990s—it is unpractical to ask for firm long-term agreements in specific terms; rather should we look to clearly stated heads of agreement based on the goodwill of the parties involved.

Today, our aim must be to search for the highest common factor between a socialist and a capitalist society. Common ground may be hard to find but this should not be impossible between the parties concerned. Hong Kong is renowned for its adaptability, and after all, the United Kingdom is the most knowledgeable Western country on China; and China, through Hong Kong, has considerable experience of the practical side of Western capitalism.

Hong Kong, as the world's most important joint venture, has been a success in the past and I see no reason why this cannot remain. Both China and the United Kingdom wish for the continued prosperity of Hong Kong and its people. This augurs well for understanding. Today, optimism and pessimism vie with each other for credulity. But one thing is certain: a mutually satisfactory agreement can never be reached without trust between the parties concerned. Past experience in the immediate post-war period and under different circumstances does not necessarily presage the future.

Co-operation rather than confrontation will create that confidence so essential to prosperity. Bland British assurances, unilateral Chinese declarations and rumours fuel fear of the unknown; but, upon reflection, there is a strong mutuality of interest and little reason to doubt the ability, good faith and common sense of those at the negotiating table. Consequently, both as a friend of the noble Lord, Lord Kadoorie and a Member of this House. I look forward to the future in a spirit of quiet optimism.

10.17 p.m.

Lord Geddes

My Lords, in any context, but particularly that of Hong Kong, it is an awesome privilege to follow such eminent and experienced speakers as the noble Lords, Lord MacLehose and Lord Rhodes. I also regret most deeply, as I am sure w ill your Lordships, the fact that we are not able to hear the noble Lord, Lord Kadoorie, this evening with all his wisdom and experience of Hong Kong. However, awesome though it may be to follow two such august speakers. it is both my lot and my slot and I shall not shirk it as I believe that this is an enormously important debate which will have significant implications, particularly for the people of Hong Kong. My noble friend Lord Fanshawe is to be congratulated upon tabling his Unstarred Question.

The key issue for Hong Kong has always been confidence. Hong Kong has one, and really only one, resource—its people. Without them and their confidence in the system, Hong Kong basically is nothing. It has no space, it has no mineral resources, no self-supporting agriculture and, perhaps most extreme of all, nothing like enough water to sustain its population. As has been mentioned so many times—and most recently tonight and in another place last week, on 16th May—the logical goals of the parties concerned in these negotiations are, by and large, common. The need for confidentiality is, I think, widely understood, as is the de facto existence of three rather than two interested parties: Beijing, Whitehall and, as has been mentioned this evening, Hong Kong. The common goal, within the constraints of transfer of sovereignty, is, surely, to keep Hong Kong after 1997 as closely resembling Hong Kong before 1997 as possible.

As the noble Lord, Lord Rhodes, said, we have heard an enormous amount about Hong Kong, particularly over the last 10 days or so, but I make no apologies for repeating some of the facts and opinions that have been mentioned over those days and, indeed, already in your Lordships' House this evening. They are, I suggest, the quality of Beijing's word and the post-1997 administration; clarification that the Basic Law, as it is now called, or mini-constitution, will reflect the terms of the agreement, since the latter will almost certainly predate the former; the maintenance of existing systems and the law; the continuance of a negotiable currency and of freedom of speech, of religion and, perhaps most important should all else fail, of travel. There are so many interwoven issues involved that it is difficult to find the beginning of the thread, and no one yet knows exactly where, when and, indeed, in what condition the end of that thread will appear.

The representatives of UMELCO, who visited London last week and some of whom are indeed listening tonight, have done us all a real service in bringing some of those issues to a head. As your Lordships are aware—again, as has been mentioned this evening—they are not the democratically elected representatives of the people of Hong Kong, but let no one doubt their value, nor that they can and do, in fact, have a good feel for the pulse of Hong Kong. I echo remarks made by other noble Lords already this evening, that their partial castigation in another place five days ago was unjustified, unwarranted and, on occasions, distinctly discourteous. UMELCO can, and should, have a significant role in shaping Hong Kong's future, at least until 1997.

I return to the key factors. Both jointly and severally, they spell out the paramount necessity for confidence. I again make no apologies for repeating that word; it will not be the last time that I use it. Can Beijing's word be trusted and, indeed, what is that word? By all past precedent, yes, it can, should and must be trusted. It has stood the test through some truly turbulent times since 1949—already 35 years. Having said that, it would of course be naive to assume that anything in this world is absolutely categorically certain. As to what is that word, I urge my noble and right honourable friends to do their utmost to impress on their opposite numbers in Beijing just how important written detail is and will continue to be in Hong Kong. Again, I say, "confidence".

From first-hand experience as a businessman, I know just how astute the Hong Kong Chinese are in commerce. They are accustomed to an internationally recognised and freely convertible currency. They are at home with an occidental approach to business. They have grown used to the importance of both the large and the small print of a contract. Beijing is perhaps not so accustomed to, and, indeed—again, from my own experience—may tend to brush aside the importance of written detail. I ask Her Majesty's Government to do their utmost in the negotiations to impress upon Beijing that, in everyone's interest, the more detail on both specifics and assurances the better. Hong Kong will then know much better where it will stand and the people will become the more confident. Surely, fear of the unknown is the greatest fear of all. If confidence even begins to slip away, that slip could well become a landslide and Hong Kong knows all about landslides, particularly in typhoon conditions.

It is, I therefore suggest, vital to all concerned to maintain and, if possible, increase confidence over the next 13, but particularly perhaps over the next five years. If confidence goes, then there could—and I only say "could"—be an exodus. If that exodus were to involve only the very top, the very wealthy, it would be bad enough. If it were to include what might be described as senior or middle management, it would be disastrous. Generally, such managers are already, or are eligible to become, British dependent territory citizens.

My second specific request to my noble and right honourable friends is therefore to ensure that the agreement with Beijing has written into it some form of dual Chinese and British nationality after 1997. Some noble Lords may recall my interest during the course of the British Nationality Bill throughout 1981. I did not then, and I do not now, advocate any radical change in this country's immigration laws. I am advised that statistically (here I take just minor issue with the noble Lord, Lord Rhodes) there are, excluding Her Majesty's Forces, some 18,000 British citizen passport holders in Hong Kong—18,000 only. They have the right of entry into and abode in the United Kingdom.

In addition there are currently about 1.1 million British dependent territory citizens who are passport holders. They have the right of entry into and abode in Hong Kong but not in the United Kingdom. They are, however, entitled to British consular protection and can travel without visas to most Western European and Commonwealth countries. There are also a further 2 million who are eligible for BDTC passports but who have not yet applied, of whom 1 million—one-half—have no travel documents of any kind. Finally, statistically, there are a further 1.1 million who have just travel documents, mainly certificates of identity, under which holders are not entitled to British consular protection and have to apply for visas for all countries.

On 2nd July 1997 it would appear, as other noble Lords have already commented, that British dependent territory citizenship will cease as far as residents of Hong Kong are concerned, for the very good reason that Hong Kong will no longer be a British dependent territory. I am advised that this situation was brought to the attention of the Chinese authorities on 3rd May of this year—that is, just 18 days ago. Mr. Cheung Yan-Lung, a member of Hong Kong's legislative council, asked Mr. Chi Peng-Fei, whom the noble Lord, Lord Fanshawe of Richmond, has already mentioned, Mr. Chi being the head of the Hong Kong and Macao Bureau, about the status of Hong Kong British dependent territory citizens after 1997. Mr. Chi is reported as having replied that on the basis of Hong Kong's historical situation and precedent, China would be prepared to make an exception for Hong Kong British dependent territory citizens to have dual nationality after 1997. Mr. Chi is further reported as having been more specific in stating that, as far as China was concerned, those in Hong Kong who had previously held BDTC passports could, for two generations after 1997, hold British overseas citizens' passports as well as Chinese passports, provided that Her Majesty's Government agreed.

My question, therefore, to my noble friend on the Front Bench is: would it be acceptable to Her Majesty's Government to write into any agreement with Beijing that all British dependent territory citizens of Hong Kong on the date of hand over would automatically become British overseas citizens for such a period, under the terms of Part III of the British Nationality Act, 1981, as suitably amended to include such persons?

Such an agreement would not—and I do emphasise "not"—in any way open the floodgates of immigration to this or any other country. As now, each such passport holder would have to apply as an individual for entry and right of abode to the country concerned. Such British Overseas Citizenship would, however, I am convinced, be seen as of real benefit to those eligible in Hong Kong. Just as important, it could well tip the balance in pursuading those who might have thought otherwise to remain in Hong Kong both up to and beyond 1997, thereby maintaining in turn that all-important confidence.

Hong Kong thrives on its commercial industry and its commercial independence, neither of which would exist without confidence by its people in themselves and in Hong Kong itself. I mentioned at the beginning of my remarks that this was, and is, a vitally important debate. Clearly, Hong Kong regards it so; your Lordships have only to look around the gallery this evening to see many familiar Hong Kong faces.

The Financial Times—surely an independent organ—commented on 18th May: Some brokers attributed the easier Hong Kong Stock Market to British Foreign Secretary Sir Geoffery Howe's statement at the House of Commons debate on Hong Kong". On the following day, 19th May, the Financial Times commented: Analysts said they expect further downward pressure on prices when the UK Upper House of Parliament starts its debate on the Hong Kong issue next Monday". There are those who are listening to us. I urge my noble friend the Minister of State to do her utmost in her closing remarks to bolster Hong Kong's confidence—and particularly to comment regarding British Overseas Citizenship after 1997 for those who will have been, up to that date, British Dependent Territory Citizens.

10.32 p.m.

Lord Shepherd

My Lords, I am sure that the noble Baroness the Minister of State will agree that since September 1982, when the issue of Hong Kong became of singular importance, the British Parliament has been not only restrained but also highly sensitive to the seriousness and delicacy of the negotiations taking place between Her Majesty's Government and the Government of the People's Republic of China.

These negotiations are without parallel. You have Her Majesty's Government negotiating on behalf of the people of a colonial territory; a people who do not have any democratic structure through which their voice can be known and heard. You have a British Government seeking, through discussions, the best accord for the future of some 5 ½ million people.

On the other hand, you have the Government of the People's Republic of China, who have always looked upon Hong Kong as theirs, and who have always rejected the treaties under which Hong Kong was ceded to Britain. And yet the Government of the People's Republic of China, although they have claimed sovereignty, have been willing to enter into a great act of statesmanship; they have been willing to sit down with a colonial power and discuss the best way in which the stability and the prosperity of the people of Hong Kong can be assured. I believe this is without any form of parallel—at least in my knowledge of history. In a sense it is that statesmanship and the consistency of the approach of the People's Republic of China that gives me the greatest confidence for the future of the people in Hong Kong.

A few weeks ago I would have hesitated on whether we should have had a debate, but the statement of the Secretary of State on Good Friday was a watershed in these negotiations and I think that it is absolutely right to have this debate. Reading carefully all that was said in another place, and listening to what has been said here so far this evening, I do not believe that anything said would in any way create discord in the negotiators in Beijing.

I must refer to one aspect which has been touched upon on a number of occasions this evening and also in the debate in another place. Reference was made to the members of the executive council and the legislative council, and I look to the noble Lord, Lord MacLehose, who was a Governor, to endorse what I now say. They are appointed not so much as a parliament but as a branch of the administration to give guidance and advice to the Government on the ministration of Hong Kong. They have a very valuable role and I would not wish, in terms of confidence, for it to be seen in Hong Kong that there is anything but united support for their presence here during these past few days while the question of Hong Kong has been debated in both Houses. I would say that if they had not been here then I would have been very critical of them. Although some of us may know Hong Kong a little bit more intimately. I think it is right that we in Parliament should be able to have an understanding of the fears and uncertainties that exist in Hong Kong today.

One needs to speak with confidence. I must say that although I have a great deal of sympathy with what has been said in regard to passports and the British Nationality Acts, I do not think that that is a matter we should seek to pursue now. If one does, one raises a question in one's mind as to what is the settlement and what trust one places in that settlement. We have heard a great deal about guarantees. Those of us who have been in political life long enough know that there are no guarantees whatever today. The only guarantee one has is the judgment one makes of the people with whom one enters into agreements and a belief that they will acknowledge them and implement them.

The People's Republic of China, even in the darkest of days of relations between Britain and China, has always acknowledged and fulfilled its agreements. I remember one occasion, in the very depths—I believe in 1967—when there was a very acute crisis and Hong Kong was desperately short of water. We relied upon the water to come through from China and nothing gave me greater satisfaction than to get the message that the water was coming through the tunnels, dead to the minute of the hour of the day of the contract. It did not need to do it, but that is China.

In the Chinese approach to this agreement one of the most significant things is that they speak of an agreement for 50 years. If they said 25 years, we should be highly suspicious. If they said an agreement to eternity, we should be highly suspicious. But to those of us who know China, 50 years has some significance. It is a period which is attainable. I have no doubt at all that in their minds 50 years is 50 years.

I read the Secretary of State's speech with very great care. It was in many ways a masterly exposition; hut you could read through it his own belief that a settlement was not only possible but that it could prove satisfactory not only to Hong Kong but, more importantly. to this British Parliament. If you read what he says, and you read again and again the consistency of what the People's Republic of China has been saying, it is very interesting to see that there is a broad thrust of agreement.

I suspect that the greatest difficulty will be in the implementation—the nuts and bolts—of such an agreement. It seems to me that the greatest danger for Hong Kong will lie in the next 12 to 18 months. My view—and I would not press it hut I would express it—is that a statement of broad agreement, if it can be achieved, would he most welcome as early as possible. I believe that if broad agreement of principles could he announced. it would put many of the fears and anxieties, I will not say completely, but largely at rest. I think that the nuts and bolts and general complexity of this agreement will take many months. if not years, not only to negotiate but to design and to implement. Therefore I would not wish for an agreement to be prolonged in order that the nuts and bolts can all be dealt with before it is announced. I believe that a broad statement of principles is desirable—I will not say when, but as early as possible.

I hope—and this is a hope—that something imaginative could also be agreed, not necessarily within the agreement but seen side by side with it. I think that the noble Lord. Lord MacLehose, will understand what I am saying. One of the difficulties today is over the question of Crown lands. The period in the New Territories—13 or 12 years and a hit—is very short if you are thinking about land development. There is no doubt that a great deal of development is being held up.

I do not press the Minister tonight, but is it not possible for an imaginative gesture both by Her Majesty's Government and by the People's Republic of China for a move to be made in the releasing of land and for land to be lent for development on a much longer term than now exists, which I think is 12 years or so? If an imaginative gesture of co-operation could go alongside a broad thrust and principle of agreement, I think that we should see a transformation in the spirit of the people of Hong Kong.

One could speak for much greater lengths but I would hope a message will go out from this House to the Government of the People's Republic of China and to the peoples of Hong Kong that they have so much in common interests, although so much now rests upon the responsibility and statesmanship of the People's Republic of China. There is so much common interest that what we now need to see is the matter resolved on paper. resolved as an agreement but recognising that the spirit is clearly there. I saw on the tape only this very afternoon, the statement of a senior official of the Foreign Office in the People's Republic of China, speaking about the great future ahead for Hong Kong within the thrust of their own policy. I believe that there is a great future for Hong Kong.

My last words are these. We live in a period of recession. In March, Hong Kong showed a 62 per cent. increase in its exports and re-exports over March of last year. It showed a 52 per cent. increase for the first three months of this year. It is a thrusting economy. It has a great future. If we can only resolve this political problem, which I believe is attainable, then the future of Hong Kong is undoubtedly great.

10.46 p.m.

Lord Tanlaw

My Lords, I think we should all be grateful to the noble Lord, Lord Fanshawe, for giving us an opportunity to express our views and hopes about the future of Hong Kong. It is a special pleasure to speak after the noble Lord, Lord Shepherd, with his knowledge and confidence in the good intentions of the Government of the People's Republic of China, which I completely share, and indeed his emphasis on the need for a broad agreement first, before we get down to details.

I hope to elaborate shortly on this, in my brief personal intervention, which I am proud to make from these Benches and in which I will declare an interest in the long association that my family has had with Hong Kong during the past hundred years. This is with a company which I am pleased to say has every intention of remaining in Hong Kong for many more years to come. Hong Kong has always been, and always will be, the gateway for trade with mainland China. If the Government of the People's Republic of China were ever far-sighted enough or courageous enough to open up all their eastern seaboard to free trade with the West, then I think not only would Hong Kong gain in importance geographically as a container port but it would become even more firmly established as the major commercial and financial centre of the Pacific Basin area. This is definitely not the moment for Hong Kong trading companies to fold up their tents: it is a time to invest in the future of Hong Kong and the prospects of a consumer market of a billion people on the Chinese mainland.

While it is my intention to speak up for the people of Hong Kong in this debate, it really is very difficult to discover who can constitutionally represent, or indeed speak with authority for, the people of Hong Kong. Therefore. I believe it is now up to us, as Members of Parliament, to do our best to ensure, as many other noble Lords have said. that the people of Hong Kong obtain a fair deal in the intermediate years, between now and 1997 and thereafter.

Perhaps I am fortunate in that, through my lady wife, who speaks six Chinese dialects. I can as a Parliamentarian, at least, listen to the views of both the Hong Kong Chinese and the People's Republic of China. They are views which are expressed in their own language, in their own phraseology and which have been represented to me, at this moment in time, as a genuine willingness to see the handover of Hong Kong in 1997 go through successfully and with the minimum disruption in the ways of life of either country. I am convinced that that is the declared intention of both Governments, with their respective Foreign Ministers. I must endorse also what other noble Lords have said about the efforts and approach made by the right honourable gentleman our own Foreign Minister.

This brings me on to the mystery men and women (as I call them) of UMELCO, who have expressed their worries and doubts about the future of Hong Kong in some extraordinarily articulate and well-drafted documents, and, indeed, verbally to me. I am not clear whether these views represent the official policy of the Government of Hong Kong or just the views of some citizens of Hong Kong. But they have been put fairly and squarely, and I hope to pursue some of the points that have perhaps not been taken up by other noble Lords, as well as the case of the BDTC passport holders.

Before coming to that, other noble Lords have spoken in various ways about the unofficial members of the Hong Kong Government. But I should like to ask the noble Baroness the Minister of State about the official members of the Hong Kong Government—that is, the civil servants—and about what is the policy of localisation. Is it really going fast enough to give the confidence to local Hong Kong Chinese, who have a future only in Hong Kong rather than a retirement home in. say, Sevenoaks? Are they given the confidence and the responsibility that they are fully capable of taking? I should like to hear whether there is any policy to accelerate the process of what has been called localisation. I believe that there are 850 expatriate civil servants who are on long-term pensionable contracts and another 2,300 who are on two-and-a-half-year contracts, which can easily not be renewed, and who can be replaced with local Hong Kong Chinese. However, these remarks are really addressed to those expatriates on long-term pensionable contracts, and aged over 40.

I come back now to the problem—the difficult problem, as everyone has recognised—of the holders of the BDTC passports, and their worries as to their validity or renewability in 1997. I do not believe that this is the moment to remind Her Majesty's Government of the anticipated difficulties which these passports will create for their holders—anticipated, as many noble Lords will recall, during the long passage of the British Nationality Bill through this House. I believe that it is incumbent on us, as Members of Parliament, to do our best to fulfil some unfulfilled obligations in this direction, and primarily to the holders of these passports. One solution that I put forward to the noble Baroness the Minister of State is that BDTC passports are converted into travel documents which are recognised internationally for visa purposes and which would provide some validity to the promise of freedom of travel after 1997 given by the right honourable gentleman the Foreign Secretary and his counterpart from the People's Republic of China. Furthermore, I believe that such a document need not necessarily have any rights of abode attached to it. But it could provide just the insurance policy required by the holders of BDTC passports in the form of a permanent exit visa from the territory if they wished to use it as such or as a business travel aid after 1997.

I come now to the main question that still remains unanswered by Her Majesty's Government, and which was touched upon by the noble Lord, Lord Shepherd. It was not really clarified in the excellent debate last week in another place, so far as I could see. It concerns the nature of the agreement which we, as Members of Parliament, will be asked to ratify in the near future. There seems to me to be some confusion as to what are the intentions of Her Majesty's Government and those of the Hong Kong Government. If the agreement to come before Parliament for ratification is concerned only with principle, I. like the noble Lord, Lord Shepherd, and various others, foresee no difficulty. If, however, it is Her Majesty's Government's intention to put a detailed agreement before Parliament which includes all the basic law, I cannot see how such an agreement can possibly be drawn up within the time available.

I am therefore asking the noble Baroness the Minister of State to define clearly what form she hopes this agreement may take. If it is the former—that is, the broader one that I have described—I believe that there is every chance that the details can be worked out amicably in due course of time. The basic law that would presumably incorporate the principles of such an agreement could be made workable, given time and good will on both sides. If, on the other hand, it is Her Majesty's Government's intent to dot the "i"s and cross the "t"s before presentation to Parliament for ratification, I can foresee the appalling delays that this will create, which can only aggravate the uncertainty as to the future of the territory and seriously undermine the confidence of its people.

Furthermore, I think the commercial organisations which at this moment in time are attempting to make plans for the future, including 1997 and beyond, would also see this as a serious set-back in their longterm future. I am equally sure that such a policy would be interpreted by the Government of China, rightly or wrongly, as a delaying tactic, which would not be conducive to a successful outcome of the current negotiations.

Assuming that the noble Baroness will confirm that it is only the heads of agreement or the broad agreement which will be ratified by Parliament, then I should like to propose the following suggestion for her consideration. It is that after ratification a working committee be set up which would not have any constitutional rights but which would include Members of this Parliament, the Hong Kong Government and representatives from the People's Republic of China. The object of this joint committee would be to implement the ratified agreement principles through the establishment of practical and detailed laws and systems by which the territory can operate in 1997.

These are really the nuts and bolts to which the noble Lord, Lord Shepherd, referred. I believe that the nuts and bolts of the agreement should be worked out above board: that the negotiators should be asked to come out of the closet. They have been in there far too long, and I think we should have a look at them and see them at work. I believe that this would be possible only after we had ratified the broad principles. Let us have a look at what they are doing, because it is very difficult to make a speech of any kind on Hong Kong and its future when one really has no idea what the negotiators are up to.

Giving them the benefit of the doubt, I am sure they are working their hearts out for a successful agreement. Very well; let us have a broad agreement, but then let us have a working committee that can show the people of Hong Kong that it means business and can show the people of Hong Kong that representatives from the People's Republic of China have their hearts in a successful negotiated finality of transfer in 1997, as indeed they have. If the secrecy continues for the nuts and bolts negotiations, I foresee some difficulties and some misunderstandings such as have crept into some of the speeches and some of the representations we have had so far.

Finally, in one intervention in the debate in another place there was a reference to comparisons between the decline of the Roman Empire and the present situation in Hong Kong. I do not believe that there are any valid comparisons here, although there could be some similarities with the problems that this created for statesmen in the fifth century A.D. Hong Kong has been part of two empires, both of which have faded away and been replaced by a new understanding that all of us are now citizens within a global society. Our responsibility as parliamentarians should reflect this change. In this context it may be fitting to quote the final sentences from Stewart Perowne's classical work, The End of the Roman World. Therefore, I conclude with this thought for all those of good intent who are involved in the future of the people of Hong Kong: There are greater institutions than empires. When they dissolve, those that dwell in them combine in new associations, both national and international, material and spiritual, but men remain what they have always been and always will be, potential citizens of the true Augustinian Eternal City".

10.59 p.m.

Lord Oram

My Lords, like others who have spoken in the debate, I should like to thank the noble Lord, Lord Fanshawe of Richmond, for giving us this opportunity of having a debate to follow up the excellent debate which was held last week in another place. Already it has become apparent that in this House we have a number of noble Lords with particular knowledge and experience of Hong Kong, and therefore for me this has been a particularly welcome opportunity to hear them expound their views. I hasten to add that I exclude myself from that category of peers specially knowledgeable on this subject. We cannot of course expect the noble Baroness, Lady Young, to add a great deal to what the Foreign Secretary said in his speech in another place last Wednesday. But we shall listen with particular interest to her comments on the notable speeches that we have heard.

Last week there were two very welcome statements concerning the future of Hong Kong. The first was the reaffirmation by the Foreign Secretary of the statement which he had earlier made in Hong Kong that he now accepted that British administration in Hong Kong cannot continue after 1997. As the noble Lord, Lord Kennet, reminded us, those wise words by the Foreign Secretary have done a good deal to repair the damage which was done by the Prime Minister during her visit to Peking in September 1982. The second welcome reaffirmation last week was by the Chinese Prime Minister when he stated at the Chinese National People's Congress that Hong Kong will retain its status as a free port and as an international finance and trade centre, and that the economic system will be preserved for 50 years after 1997—a statement which has been referred to by a number of previous speakers.

I believe that those two statements, taken together, one by the British Government and one by the Chinese Government, surely lay the foundation of an acceptable treaty about the future of Hong Kong—at least for the kind of broad agreement of which my noble friend Lord Shepherd was speaking, and he had the support of the noble Lord, Lord Tanlaw. I believe with them that this is the kind of agreement at which we should be aiming, and that the "nuts and bolts"—to use Lord Shepherd's expression—should be left to later, more detailed, negotiations.

In his speech last week the Foreign Secretary said that Hong Kong is a unique society calling for a unique solution. It is indeed unique—unique in the history of the decolonisation of the former British Empire. Major parts of that empire only reached independence after a history of turbulence and struggle. But in the case of Hong Kong it is to be hoped that the situation will be different. In no other case of the granting of independence has there been a deadline accepted by both sides which provides for such a long period of preparation for independence. In no other case that I can recall have the negotiators reached such a measure of basic agreement in principle so long before the point at which the transfer of power is projected. Therefore, although we may only have a short period to conclude the treaty, we have a long period to prepare for the actual transfer of authority.

I suggest that the big question that follows from that is: how are we to use that period of preparation? The Chinese Government have declared that they want to see Hong Kong people administering Hong Kong. I believe that on all sides that can be taken as a very desirable objective. But the question is: how fully and by what means will the people of Hong Kong be able to administer their territory? It was on this point alone that I found myself in some difficulty when I read the Foreign Secretary's speech. Although he said that within the next few years the government of Hong Kong will be developed on increasingly representative lines, he obviously regarded the nature of that development as something for the Hong Kong Government themselves to determine. That troubles me when I recall that the Hong Kong Government are not a democratically elected government; they are a government which are appointed from above. They are not themselves democratic, and therefore in my view they cannot be the best judge of how democracy in Hong Kong can be brought about.

In the coming years it seems to me that we need the utmost encouragement of the growth of democracy from below. There have been a number of references to the delegations from Hong Kong that have been speaking and writing to us in recent days. I should like to refer to the unofficial delegation which was led by Dr. Ding. He and his colleagues have put forward what seem to me to be modest and sensible proposals for a step-by-step approach towards direct elections to the executive and legislative councils. I believe that we would do well to give serious consideration to those suggestions that that delegation has put forward.

However, I would go further than Dr. Ding and his colleagues in seeking democracy for Hong Kong. They have in mind elections to the various parts of the machinery of government. But whenever I think of democracy I have in mind very much more than that, because I believe that democracy is fragile unless it is underpinned by a range of social and economic organisations, such as trade unions, student organizations, co-operatives, voluntary social service groups, women's organisations and neighbourhood committees. That kind of organization, of which we have a vast number in our own democratic society, must be there to underpin the electoral system for the machinery of government. I hope that from now on the maximum encouragement will be given to developments of that kind.

It is sometimes suggested—indeed, several speakers in another place raised this point; and I believe that the noble Lord, Lord Kennet, this evening also made reference to this—that the creation of a truly democratic Hong Kong would be unwelcome to China and might therefore hinder the process of preparation. Such a view, it seems to me, fails to take into account the changes which are currently taking place in the People's Republic of China itself under the leadership of Chairman Deng and his colleagues.

I should like to say a few words about those changes. A few months ago I had an opportunity of an intensive study tour, particularly in rural China, when I was able to appreciate the extent to which the peasants are now being empowered to conduct their own affairs to a vastly greater degree than was possible during the years of the cultural revolution and during the period when they were organised in massive communes. It is sometimes said that China, through adopting these measures, is abandoning its socialism. In my view it is doing no such thing, but it is taking important steps towards a much more liberal form of socialism.

In weighing up the relationship between mainland China and Hong Kong I think that we ought to have these developments in China very much in mind, because with such developments proceeding on the mainland I do not believe that a democratic Hong Kong will be anathema to the Chinese leaders. In these discussions it is too readily assumed that the economies of Hong Kong and of mainland China are so different that, like oil and water, they cannot be made to mix. That I believe to be a much too pessimistic view, as other speakers have suggested, and particularly my noble friend Lord Rhodes.

If we have in mind what I have described as the liberalising process in China and also again a matter that has been referred to by others, the fact that China is establishing special economic zones in the coastal regions in order to encourage foreign investment, and in order to open the Chinese economy to the rest of the world, and if we take those things all together, then I believe that we and the people of Hong Kong can face the future with that optimism that I am glad to say has been expressed in almost every speech in this debate. I am confident that a modus vivendi between these different ways of life can be found, and in fact will be found.

Only last week the Prime Minister of China, in a speech to which I have already referred. indicated further steps in developing the so-called "responsibility system" through which Chinese workers are not only reaching decisions about their working lives, but are rewarded in proportion to the success of their efforts.

11.12 p.m.

Lord Mulley

My Lords, the House is again indebted to the noble Lord, Lord Fanshawe of Richmond, for introducing a debate which is both topical and of long-term importance, although this week it is on rather a different aspect of our heritage from the debate last week, which also attracted vast experience and a large number of speakers despite the lateness of the hour. I know that he, as a former Whip and Minister in another place, and I should not regard this as a late hour. but as a junior Member of your Lordships' House I would ask that we do not follow the bad example of the other place in the matter of the hours that they tend to keep.

Unlike most people who have spoken but perhaps like my noble friend Lord Oram, I cannot claim the great personal knowledge that has been brought to bear on the subject. because my visits have been only three or four in number and of fairly short duration. In between the visits I noticed enormous changes. There must have even been big changes since the noble Lord, Lord MacLehose, took me around in his helicopter to see the developments about five years ago. One can only conclude after seeing how Hong Kong has coped with that enormous expansion of population, many members of which were unsought—and, I may say, since I was deploying a lot of soldiers to try to stop them coming in, unwanted—that Hong Kong has coped extraordinarily well with the situation.

When I was there of course I was more concerned with defence than with constitutional matters. I remember well my first visit, when my host took me to his house via an appointment with his tailor, which indicated that, as I found frequently, the senior military personnel always had their priorities right. There is no question but that Hong Kong is a unique society. It is now in a unique international legal situation and it requires a unique solution. I think that it would be easier to get agreement about the nature of the uniqueness of the society and of the legal and historic situation than to get unanimity about the precision of the unique solution that we should all like to find.

But we are privileged tonight in having heard the speech of the noble Lord, Lord MacLehose, who brings to bear an unique experience of Hong Kong and China after not only his eleven years of most distinguished governorship but also a previous period as a political adviser in the colony. I am sure that noble Lords were as disappointed as I that the noble Lord, Lord Kadoorie, was unable to give us personally the benefit of his long and distinguished career and experience, but we are indebted to my noble friend Lord Rhodes for acting as his voice in this matter, at the sacrifice, I fear, perhaps, of some comments by Lord Rhodes from his own considerable experience (noble Lords will know that he led with great distinction three or four parliamentary delegations to China and in fact did as much as anyone in recent years to improve the bilateral relations between our two countries).

Quite clearly, from the historical survey that the noble Lord, Lord Kennet, succinctly gave us, it is not going to be easy—probably impossible—to satisfy all the parties and all the aspirations of those concerned—the people of Hong Kong, and the citizens of the People's Republic of China, with their concerns about Taiwan and their northern neighbours, as well as their commercial concern with Hong Kong as their outlet to the wider world. However, while there are these problems, I believe that there is a strong community of interests, as many noble Lords have said, which should make it possible to get a satisfactory agreement.

There are also, more particularly for the concern of the United Kingdom Parliament, possible problems of immigration, although I would tend to follow the advice of the noble Lord, Lord Shepherd, rather than that of the noble Lords, Lords Geddes and Tanlaw, who want to get very detailed answers to some very difficult questions tonight when we are not far into the details of the very delicate negotiations that are ahead. Quite clearly, as appeared in the very good and bipartisan debate in the other House and. I believe, in our equally good and informed debate here tonight, we must recognise that the actual conduct of the negotiations must be left to the Government. I think that we need to stress too that Hong Kong is really only a colony in terms. That I know is one of the problems of its relationship, and the concern of the People's Republic is to remove what they may feel is a stigma, but Hong Kong does enjoy an immense amount of autonomy, as I am sure the noble Lord, Lord MacLehose, would endorse. I found, when I tried to talk to them about a little greater contribution to their local defence costs, that we certainly had no revenue benefits from the territory. So any idea that we want to stay for any commercial or revenue purposes can certainly be put to rest.

There is a difficulty that has been expressed by a number of speakers that there are not democratic institutions and there is probably not time to develop them before at least the first stage of the negotiations has to be concluded. One has heard many people speak about a deadline of September next, which is not very far away. Maybe the noble Baroness the Minister can tell us to what extent the Government feel bound by such a deadline. As has been said, it is very important that the opinion of the people of Hong Kong should be fully taken into account; although, clearly, there is the difficulty as to how one can obtain that opinion. I endorse what the noble Lords, Lord Fanshawe, Lord Shepherd, and others have said about the valuable contribution that is being made by the unofficial members of the Executive and Legislative Councils and underline the fact that we welcome their coming here to brief us on their views and the issues as they see them in Hong Kong. But at the same time, as I am sure they would agree, they are not, and cannot be, fully representative. It is very difficult to see how in the short term—although I agree very strongly with my noble friend Lord Oram that one should seek to develop it in the years ahead when, as I hope, there will be an agreement of a satisfactory character—there will be democratic institutions necessary to put it fully into effect.

The idea of a referendum has not been raised here tonight, but it was raised, I think, in the other place. I do not feel that a referendum would be appropriate and I think our own experience of referenda has not been exactly encouraging; but certainly it would imply that the referendum was the decision. I think that we must certainly disabuse anyone of any idea that the people of Hong Kong will be the final arbiter in the matter. I hope the Minister will confirm again tonight that the final decision in any agreement must rest with the United Kingdom Parliament. I think that the Foreign Secretary has already said this, but I believe it is important that that should be clear.

Of course, I think that we must avoid at all costs the mistake that I recognise was made by successive Governments over the Falklands, where the sovereignty of the United Kingdom Parliament was handed over not only to a parish council but to a pretty small parish council at that. We cannot say that no agreement will he made without the consent of the local people in Hong Kong even if there was some way of ascertaining that opinion. Obviously, their views and their interests are vital, but the final decision I believe must rest with the United Kingdom and Parliament.

It seems to me that, after the rather diastrous start in 1982 to which reference has been made, negotiations now seem to be on a basis which could and should lead to a satisfactory outcome. I think it is necessary to say that full and detailed proposals will be necessary before either the people of Hong Kong or this House or another place can give a decisive view. I would stress this to the Government and I would ask our Chinese friends to understand it as well. Indeed, I hope they will heed, both in Hong Kong and in Beijing, the very wise speech, the very measured speech, of the noble Lord, Lord MacLehose, on these points. I believe that it is necessary to have detail in order to allay the fears and to sustain confidence in Hong Kong itself.

I warmly welcome the improvement in bilateral relations with the People's Republic. I had some dealings myself when I was Secretary of State for Defence with delegations here from China; and I formed the view that they had genuine and sincere desires not only in the trade field but for closer relations over a whole range of industrial and commercial policies. I would strongly endorse what has been said by a number of noble Lords—Lord Rhodes, Lord Geddes and Lord Shepherd—about the great importance of making it clear that we do accept their sincerity and trust and that this is the basis on which all the negotiations must be carried through. I acknowledge the great experience of my noble friend Lord Shepherd as a negotiator, particularly in Hong Kong, and in the Far East generally.

We should acknowledge the imaginative approach of the Chinese leaders. As the Foreign Secretary said, it was put to him what they were seeking was to get two systems within one nation. That is fine as a general principle, but, if I may take the engineering metaphor of my noble friend Lord Shepherd a little further, I would not be so demanding that I would want to know all the nuts and bolts of an agreement, though I do not think general principles—a blue-print, to carry on the engineering simile—would do. What we must certainly have, if we are asked to form a view, is a prototype of the kind of regime that will succeed British government in 1997.

Of course. it is prosperity, not only in the future but now, that is important both for China and for the people of Hong Kong. I believe that there is a need for confidence to sustain that prosperity, to sustain the very remarkable figures that my noble friend Lord Shepherd gave us as their increased exports at a time of world recession. I think he said 62 per cent. in March this year as compared with March 1983. I only wish that we could have some small portion of a percentage of that character.

If I may, I shall conclude by a quotation from the South China: Morning Post nine days after the Foreign Secretary's press conference in Hong Kong, when the immediate impact had begun to die away. It reads: However, if China was prepared to accept Hongkong for 143 tumultuous years despite massive changes, why should it not also honour an international agreement covering the next 50 years? Let us acknowledge it had to come to an end one day. And what we have to be certain about in making this transition is not to bemoan our fate and stand aloof from change, but to make sure that the Hongkong spirit continues regardless of what flag flies. It is in the Government's power, in their talks with the Chinese Government, to ensure that the Hong Kong spirit survives as predicted in that editorial, and I hope that the noble Baroness, the Minister of State, will be able to confirm tonight that that is Her Majesty's Government's objective.

11.28 p.m.

The Minister of State, Foreign and Commonwealth Office (Baroness Young)

My Lords, I am sure that I speak on behalf of the whole House when I say that we are all very grateful to my noble friend Lord Fanshawe for tabling this Question this evening and giving the House an opportunity to debate this important issue of Hong Kong's future. I should like to assure your Lordships that it is a matter of the highest concern to Her Majesty's Government.

I think we would all agree that we have been fortunate this evening to hear from so many noble Lords who have very considerable personal experience of being in government in Hong Kong, having business interests in Hong Kong, knowing Hong Kong from visits or having visited China. I should like to share with the noble Lord, Lord Mulley, our disappointment that we were unable to hear from the noble Lord, Lord Kadoorie, but I think we were all grateful to the noble Lord, Lord Rhodes, for putting Lord Kadoorie's points for him. I shall, of course, draw to the attention of my right honourable friend the Secretary of State what has been said in the debate this evening. We shall study it carefully.

Many noble Lords who are present this evening know well the remarkable community which is Hong Kong. Anyone who has visited the territory will have been impressed by its economic and social achievements. It is unique in its historical background, notably the fact that 92 per cent. of its land area is covered by a lease which expires in 1997. It is unique, too, in the negotiations which are now under way to assure its future.

It is natural and understandable that the people of the territory should feel anxiety about their future. Some noble Lords have no doubt met the groups which have recently visited London to express the concern of the Hong Kong people and their views about the way in which the territory should evolve. It is our intention in the negotiations to do everything possible to allay those concerns. I hope that this meets one of the points which was raised by my noble friend Lord Geddes.

Her Majesty's Government are also deeply aware of the anxieties and frustrations caused by the confidentiality of the negotiations. We believe that this confidentiality, upon which both sides are agreed, provides our negotiators with the best basis on which to operate. But we have thought it right, without breaking the confidentiality of the talks, to give as clear a description as we can of the general approach of the British Government to the important problem at stake.

This was first done during the visit which my right honourable friend the Foreign and Commonwealth Secretary undertook to the Far East last month. In Peking he held detailed and serious talks with the Chinese leaders on all aspects of the future of Hong Kong. His aim was to review the course of the negotiations which are under way at diplomatic level, to sum up the progress made and to give them a fresh impetus. In Hong Kong my right honourable friend held discussions with the governor and the unofficial members of the Executive and Legislative Councils, as well as meeting representatives of various strands of local opinion. He also made a public statement on the Government's approach to Hong Kong's future. Copies of that statement have been deposited in the Library of the House.

In that statement the Foreign and Commonwealth Secretary described his clear conclusion that it would not be realistic to think of an agreement that provided for continued British administration in Hong Kong after 1997. Every possibility had been fully explored before that conclusion was reached, but it was based on experience in the negotiations themselves and on the reality of the expiry of the lease over the New Territories in 1997. Instead, we have sought to explore other ways of securing the assurances necessary for continuity in Hong Kong.

There is a good basis on which we can build. The Chinese Government have made it clear publicly that they recognise the special circumstances of Hong Kong and that they want its social and economic systems and lifestyle to remain unchanged. We have therefore been examining with the Government of China how it might be possible to arrive at arrangements that would secure for Hong Kong, after 1997, a high degree of autonomy under Chinese sovereignty and that would preserve the way of life of Hong Kong, together with the essentials of the present systems.

It is indeed possible to foresee a situation in the future in which Hong Kong would, as part of China, enjoy a high degree of autonomy which would last for at least 50 years from 1997. In such a situation, that autonomy would extend to administration, the making of laws, the maintenance of Hong Kong's system of justice and responsibility for public order in the territory. Under such arrangements, the laws of Hong Kong, including the written and common law, would be based upon the present system. Hong Kong would manage its own public finances within which taxes levied in Hong Kong would, as now, be employed in Hong Kong for the benefit of the Hong Kong people. There would also be a place for outside people—from Britain and elsewhere—to go on working and making a contribution to life in Hong Kong.

What is of particular importance is that under such arrangements Hong Kong would continue to operate as an international financial and commercial centre, as it does today. Hong Kong's extensive and direct economic relations with its trading partners all over the world would be allowed to continue and develop. Arrangements would need to be made in co-operation with other countries concerned to ensure that Hong Kong remained an important participant in regional and world economic institutions such as the Asian Development Bank, the Multi-Fibre Arrangement, and in particular the GATT.

My noble friend Lord Fanshawe asked about the detail of the agreement. In this context, I should emphasise the high degree of autonomy already exercised today by the Hong Kong Government. The day-to-day life of the territory is determined by decisions taken in Hong Kong, not in London. Those who live in Hong Kong and all those who have dealings with the territory will be looking for an assurance that such autonomy will be maintained after 1997. That assurance can best be provided by a detailed and binding agreement clearly describing arrangements for the future.

A number of noble Lords—including my noble friend Lord Fanshawe and the noble Lord, Lord Kennet—asked about the democratic structure of Hong Kong. A related point is the degree to which the administration of Hong Kong will be in the hands of local people. The Chinese Government have made it clear, publicly, that after 1997 Hong Kong people will administer Hong Kong. This would be in line with the process of democratic development in Hong Kong which is already under way and which Her Majesty's Government fully endorse.

At the local level in Hong Kong, proposals have recently been made which will strengthen the existing elected element in government. In the summer the Hong Kong Government will be publishing a Green Paper setting out proposals whereby the representative status of the two central government institutions—the Executive Council and the Legislative Council—might be developed in the years to come. For their part, the British Government will provide—up to 1997—a firm framework within which the Hong Kong Government, in consultation with the local people, can administer the territory and plan for its future. As they contemplate the future, the Hong Kong people naturally have questions in their minds. They are looking for assurances that an agreement will be observed. They are asking how they can give their views on the terms of an agreement. Some are concerned about their nationality status. I shall address these questions in turn.

My noble friend Lord Fanshawe and the noble Lord, Lord MacLehose, spoke of the implementation of the agreement which can never be absolutely guaranteed. But there are very powerful incentives working for the upholding of an agreement on Hong Kong. First, there is the fact that the international prestige of two sovereign governments—parties to a binding agreement—would be at stake. Secondly, there is the common interest of both parties, publicly affirmed, in Hong Kong's continued success. This was a point made by the noble Lord, Lord Shepherd.

Thirdly, there are the excellent relations which exist between Britain and China. These would underpin our objective of a binding international agreement in which arrangements for Hong Kong's continuing prosperity and stability, based on a high degree of autonomy, would be formally recorded. I believe this meets the point made by the noble Lord, Lord Mulley.

The noble Lords, Lord Tanlaw, Lord Shepherd and Lord Oram, asked about the nature of the agreement. With regard to the proposal of the noble Lord, Lord Tanlaw, only an outline agreement of broad principles should be agreed and presented to Parliament; I cannot go into detail on the exact form which may emerge. However, I have been impressed by the arguments which have been put by other noble Lords that to sustain confidence a package of proposals should contain sufficient detail to show people in Hong Kong how it is envisaged that continuity should be maintained.

I was asked by the noble Lord, Lord Tanlaw, about the localisation of the Hong Kong Civil Service. I should like to say that there is already a substantial majority of Hong Kong local people in the public service. The number is increasing and there are in particular growing numbers of Hong Kong Chinese in senior posts. Her Majesty's Government fully support this policy of the Hong Kong Government.

The noble Lord, Lord Rhodes, asked about consultation. Our consultation with the people of Hong Kong has been a continuous process from the beginning of the negotiations. It takes many and varied forms. Such debates as this one allow the process to be intensified and taken ahead on a more informed basis. We shall continue to take Hong Kong views fully into account. In due course the people of Hong Kong will have a full opportunity to make their views known on the terms of an agreement. We are considering actively what method might be adopted: but I have to say now that a referendum would have very real drawbacks.

Nearly every noble Lord referred to the question of nationality. Her Majesty's Government fully understand the concerns of the Hong Kong people, particularly the BDTCs, which have been so clearly expressed, notably by the noble Lord, Lord MacLehose, the noble Lord, Lord Geddes, and the noble Lord, Lord Tanlaw, about their position after 1997. We realise their desire that their position should be protected. I know that noble Lords will understand that I cannot go into any detail on the negotiations with the Chinese Government on this or other points. I can confirm that we are looking for arrangements that will allow Hong Kong people to enter and leave the territory freely while looking forward with confidence to a secure future there.

The Government understand the concerns of people in Hong Kong with British nationality, the great majority of whom are British dependent territory citizens, and their wish to retain that nationality. I have to say that I do not believe that either this Parliament or a successor would favour changes which stimulated emigration from Hong Kong to the United Kingdom or elsewhere. That is a further reason why we are looking for arrangements which would allow Hong Kong people to enter and leave the territory freely and at the same time provide a secure future for them there.

On the question of timing, to which a number of noble Lords referred, where the timetable of our negotiations is concerned there can be no question of rushing Parliament. It is too soon to say precisely when a draft agreement might be published, but we are working to a timetable in the talks which takes account of Chinese wishes and of all our own requirements. We are aware of the Chinese desire for an announcement in September. At the same time we recognise that any arrangements negotiated must subsequently be debated by Parliament. taking into account the views of Hong Kong.

Perhaps I may make it clear to the noble Lord, Lord Mulley, who raised this point, and to others who asked, that as far as the British Government are concerned it is Parliament which will make the final decisions on Hong Kong's future. Meanwhile it is our intention to keep our responsibility for administration up to 1997.

Let me try to sum up. We realise that the unique circumstances of Hong Kong require imaginative solutions. The territory is home to a highly individual community which has evolved its own institutions and its own distinctive lifestyle. We want to see the essence of all this endure. We see our good relations with China and our common interest in Hong Kong's stable future as a basis on which to build the continuity of a society in order to provide a secure home for its inhabitants and a major centre serving the world economy.

Our complex and difficult negotiations with the Chinese Government continue. Although a good deal of progress has been made, we are still some way from an agreement. A number of important points still have to be resolved, but we believe that on both sides there is a will and a commitment to overcome the remaining obstacles and to achieve an agreement. Our aim is a binding agreement which will secure a high degree of continuity for Hong Kong under Chinese sovereignty, which will preserve the essentials of the present system and way of life in Hong Kong and which will be acceptable to the people of Hong Kong. It must be one which we can honourably commend to Parliament.