Hong Kong

HC Deb 05 December 1984 vol 69 cc389-472

Mr. Speaker

This important debate on the Hong Kong agreement has had a rather late start, for reasons that the House well knows. I must announce to the House that I propose to operate the 10 minute limit on speeches between 7 pm and 8.50 pm. I hope that all hon. Members will bear that limitation in mind when making their speeches, because, as I said, this debate has had a late start and there is great pressure from hon. Members to participate.

5.49 pm

The Secretary of State for Foreign and Commonwealth Affairs (Sir Geoffrey Howe)

I beg to move: That this House, having considered the views of the people of Hong Kong as set out in the reports of the Assessment Office and the Independent Monitoring Team published in White Paper, Cmnd. 9407, approves Her Majesty's Government's intention to sign the agreement on the future of Hong Kong negotiated with the Chinese Government, which was published in White Paper, Cmnd. 9352. The draft agreement which the motion commends for the approval of the House is a document of historic importance. It has a significance that goes well beyond Hong Kong itself. But it is with the unique and thriving community of Hong Kong that the House is rightly concerned today.

Hong Kong owes its success to the spirit of free enterprise and resourcefulness that has for generations been displayed by the people of Hong Kong of all races. It is that spirit that has created Hong Kong's unique way of life, and it is the preservation of that way of life, its rights and freedoms, and the prosperity and stability on which it has been built, that has been our firm objective. We have sought that throughout all the work that has produced the agreement that is the subject of today's debate. In that work, I have been most grateful to the official Opposition and to hon. Members in all parts of the House for the understanding and support which they have given me in a task which I have been able to feel I have been undertaking on behalf of the whole House.

The agreement that has resulted must, of course, be judged against the background of the historical realities that created the problem with which we are concerned today.

In May 1898, the second convention of Peking was signed, in Peking, by the British Minister resident there, Sir Claud MacDonald. I cannot believe that at the time when he signed that document he had any idea of the complexity of the problems that he would be bequeathing to the present generation.

Under that convention, the area which later became known as the New Territories of Hong Kong was leased to Britain for a period of 99 years. Those territories were added to the relatively small areas of Kowloon and Hong Kong Island, which had been ceded to Britain during the previous half-century. That 1898 lease covers 92 per cent. of the land territory of Hong Kong as it is today. It expires, of course, on 30 June 1997. On that date, the New Territories will revert to China.

The ceded territories, the other 8 per cent., have, over the past 87 years, become completely integrated with the leased territories. On their own, they would not be viable. It is those circumstances that compel the need for a specific agreement at this time.

Yet the need for accommodation with China is not new to Hong Kong. Throughout most of its existence, Hong Kong has been dependent on co-operation with its giant neighbour. In recent years that has developed into a strong and complex relationship.

That is the background to the long— and at times very difficult—negotiations that have been taking place over the past two years. They have had to be conducted in confidence. I know that the need for confidentiality has been frustrating—for Parliament and, of course, much more so for the people of Hong Kong. Both have shown great understanding, and both, I hope, will take some comfort from my judgment that confidentiality was absolutely essential to the success of the negotiations.

I should like to give warm thanks to the members of the Hong Kong Executive Council, who played a vital part in advising the Government, through the Governor, throughout the negotiations. I give thanks too to the members of the Legislative Council. The confidentiality of the negotiations posed particular problems for them.

The Governor of Hong Kong has borne the dual burden of continuing responsibility for the government of Hong Kong and of continuous involvement in the negotiations. If I may be allowed to say so, he has borne that heavy burden with great distinction.

Our Ambassadors at Peking, successively Sir Percy Cradock and Sir Richard Evans, have led the negotiating team with great skill. They and all the officials involved, from the Hong Kong Government as well as from our own diplomatic service, well deserve the tribute paid to them by the Far Eastern Economic Review, which spoke of the "sheer professionalism" of the British team. I have no doubt that the whole House will wish to join me in thanking and congratulating them all.

Throughout all our work, we have aimed, of course, to reach agreement on arrangements which would be acceptable to the people of Hong Kong; arrangements that would enable them, and the international community, to have confidence in the future of the territory.

From the outset it was clear that such arrangements would also need to be acceptable to the Chinese Government. That is just another reflection of the fact that Hong Kong could never have become the place that it is today without establishing a practical relationship with the People's Republic of China.

In the early part of the negotiations we looked for ways which might allow a British Administration to continue in Hong Kong after 1997—on the basis that Britain would recognise China's sovereignty over the whole of Hong Kong. That course would have meant the minimum of change. The people of Hong Kong certainly expected that we would, as a first step, see if that was possible. So we tried, over 12 months of negotiation. But it became quite clear that a solution along those lines would not be acceptable to the Chinese Government, and that if we had persisted in seeking it, the talks would have broken down. That would not have altered the fact that 92 per cent. of the territory would revert to China, under the lease, in 1997. But in that way it would have done so without any agreement on its future.

We concluded that a breakdown in negotiations, with all the uncertainties that that would have created, could not in the long view offer satisfactory prospects for the people of Hong Kong, and for is future stability and prosperity.

We therefore decided, with the agreement of the Governor and of the Executive Council of Hong Kong, to seek to negotiate arrangements under which British administration in Hong Kong would cease after 1997 and Hong Kong, though becoming a part of China, would retain her distinctive way of life as a special administrative region of China.

The draft agreement before the House today is the result of the negotiations which were brought to a conclusion on that basis. If the motion on the Order Paper is carried, my right hon. Friend the Prime Minister and I will travel to Peking later this month to sign the agreement—and we shall, of course, be going as well to Hong Kong. This will be my third visit to Peking in nine months. It will provide an opportunity to renew the close working relationship that we have established with our Chinese colleagues. It must be said that this agreement would not have been possible without the vision and realism which has characterised the approach of the Government of the People's Republic of China to these negotiations. I should like to express my personal appreciation of the part played by my opposite number, Mr. Wu Xueqian, in bringing our negotiations to a successful conclusion.

Following signature, we shall bring forward legislation early next year to provide for termination of sovereignty in 1997, and to provide powers to make other changes to the law, including the nationality law, which will be necessary in connection with the agreement and termination of sovereignty.

The agreement is both comprehensive and detailed. Since it was published on 26 September, hon. Members will have had more than two months to study it. I described its main provisions in my statement of 25 October. Today I want only to stress a few of its significant features.

First, the joint declaration and its annexes constitute a legally binding international agreement. As the Chinese Foreign Minister recently told the Standing Committee of the National People's Congress in Peking, the joint declaration is a form of international treaty; it has the same force in international law and is legally binding.

Second, the policies set out in the agreement will, under the terms of the agreement, be stipulated in a basic law which will be passed by the National People's Congress of China and which will establish the special constitutional status of the Hong Kong special administrative region. The agreement provides that these policies will remain unchanged for 50 years.

The content of the basic law, and the arrangements for its drafting, are rightly of great interest to the people of Hong Kong. They are of crucial importance.

The law will be passed by the Chinese National People's Congress under the powers conferred on it by articles 31 and 62 of the Chinese constitution. Those articles provide the basis for special administrative regions with systems different from those in other parts of China.

It is, of course, the Chinese who must undertake the drafting of the basic law. But the joint declaration states that the basic policies for Hong Kong set out in the joint declaration itself, and elaborated in annex 1, will be stipulated in the basic law. The agreement thus provides clear guidelines for the drafting of that law.

I know that the Chinese leaders understand the great importance of this. I am confident, too, that they will have noted the hope, which has been widely expressed in recent weeks, that the people of Hong Kong will be fully consulted about the drafting of the law.

The Chinese Government have indicated that the people of Hong Kong will be consulted, though the exact form of that consultation has yet to be made clear. I welcome that indication. In that and in other respects, we stand ready to extend to the Chinese our fullest co-operation.

The third point I want to stress about the agreement is that it provides sufficient detail, in the many areas it covers, to give confidence, both internationally as well as in Hong Kong itself, that the future is a secure one. It provides a high level of autonomy for Hong Kong, as a special administrative region of the People's Republic of China. It provides a firm guarantee that Socialist policies pursued on the mainland will not be practised in Hong Kong. It provides for the administration of Hong Kong to be in local hands, and for the Executive to be accountable to an elected legislature. It provides for judicial power to be exercised independently and for a public service in which appointment and promotion will depend on qualifications, experience and ability.

The preservation of the legal system and courts to which Hong Kong is accustomed is fundamental to the continuation of Hong Kong's way of life. The agreement provides for this. Appeals to the Privy Council will cease. Instead there will be a Court of Final Appeal in Hong Kong.

The English language will continue to have equal validity with Chinese in the courts. The work of translating the laws of Hong Kong into Chinese is now going ahead.

The agreement provides for Hong Kong to continue as a world commercial, financial and communications centre. It will be responsible for conducting its own external trade, have its own freely convertible currency, and enjoy free flow of capital without exchange control.

Although the Central People's Government in China will be responsible for its external relations, Hong Kong will have considerable autonomy in conducting relations with other countries in many important areas. There are arrangements permitting Hong Kong to continue its participation in the GATT and other international trade agreements, and to participate in relevant international organisations. There are provisions for Hong Kong to continue to be an important centre for shipping and civil aviation.

There are full and explicit provisions for the preservation of human rights and freedoms, including those specified in the international covenants on civil and political and economic, social and cultural rights.

Finally, secure arrangements have been made both for the recognition of existing land leases after 1997, and for the extension of leases expiring before 1997, and for the granting of new leases for terms of up to 50 years beyond 1997. Those are only the broad outline. There is much more detail in the agreement.

So far, I have dealt with the future after 1997, but the next 12 years are also crucial for Hong Kong.

Mr. Eric Deakins (Walthamstow)

Whose task will it be to secure international recognition of this agreement and its terms in the period after 1997? Is it for China or for Britain, or will it be a combination of both? If it is both, has an adequate machinery been set up for that purpose?

Sir Geoffrey Howe

There are various aspects of that question. If the hon. Gentleman is referring to the need to secure continued recognition of Hong Kong's place in the GATT and other international arrangements, that is something on which both countries will co-operate. That is specifically provided for as one of the objectives of the joint liaison group, to which I shall refer in a moment.

The next 12 years are also crucial for Hong Kong. In order to ensure the success of this enterprise, and to make sure that the provisions of the agreement are put into practice—such as the one that I have just mentioned—there will be a need for close co-operation between Britain and China in the period between now and 1997, especially in the later years. The joint liaison group which is provided for by the agreement is the best means of achieving this and of avoiding abrupt changes in 1997 which might disturb the continuity of life at that time.

The joint liaison group will be charged with the tasks of consulting on the implementation of the joint declaration and of discussing matters relating to the smooth transfer of government in 1997, as well as exchanging information. It will continue in being until the year 2000.

It is our firm intention that the group should carry out its functions so as to build confidence between the British and Chinese Governments on all matters relating to the agreement, as well as building confidence among the people of Hong Kong. We shall give the group our full co-operation to that end, because I regard its work as of the highest importance.

Mr. Alfred Morris (Manchester, Wythenshawe)

The right hon. and learned Gentleman will be aware that some people in Hong Kong are concerned that they could become stateless persons. Can he say anything on that important matter?

Sir Geoffrey Howe

That could arise in certain cases. It will be dealt with so as to ensure that statelessness does not happen. This matter will be included in the provisions of the Bill that we shall be introducing in the new year. I am glad to have had the opportunity of dealing with that point.

Mr. David Howell (Guildford)

If the joint liaison group is to play a leading part in underpinning the international status of the special administrative region after 1997, will people from Hong Kong be among its members?

Sir Geoffrey Howe

I was about to come to that point. I appreciate my right hon. Friend's concern, but perhaps he will allow me to deal with it at the appropriate point in my speech.

We took pains to ensure that there could be no possible ambiguity about what the group's functions will be. In no sense will it be a shadow Government. The agreement makes it plain that, in Chinese phraseology, the group shall be an organ of liaison, not an organ of power, and that it shall take no part in the administration of Hong Kong. The agreement also states explicitly that Britain will remain fully responsible for the administration of Hong Kong until 1997. I assure the House of the Government's wholehearted commitment to the full exercise of their responsibilities throughout that period.

Of course, the interests of Hong Kong will need to be properly represented on the joint liaison group. The exact composition of the group has yet to be determined, but I should like to make it clear that the British delegation will include officials from the Hong Kong Government. There will continue to be the fullest consultation with the Executive Council and with other representatives of the people of Hong Kong. It is important that the group should be able to enjoy the kind of confidence that is essential if it is to carry out its work properly.

Mr. Russell Johnston (Inverness, Nairn and Lochaber)

Is the right hon. and learned Gentleman saying that while officials of the Hong Kong Government will serve on the British side of the joint liaison group, there will be no unofficial representatives?

Sir Geoffrey Howe

Annex II to the joint declaration on page 25 of the White Paper makes it clear that the joint liaison group shall enjoy diplomatic privileges. It is a diplomatic group. There is provision for the appointment of representatives of that kind to the group. However, as the group carries out its work — no doubt working through a variety of methods as time goes by — it is important that there is full representation of the viewpoint of the Hong Kong people. This point has been raised with me in a number of places. It is important that it takes sufficient account of the view of the Hong Kong people, as I hope we have been able to do during our negotiations thus far. As the group's work intensifies, that will be important.

Mr. Robert Adley (Christchurch)

Is my right hon. and learned Friend saying that the joint liaison group will remain throughout the period of 12 years, that in no way will it evolve and that it will remain a purely diplomatic body?

Sir Geoffrey Howe

The agreement provides that the joint liaison group may, by agreement between the two sides, decide to set up specialist sub-groups to deal with particular subjects requiring expert assistance. Members of the joint liaison group and sub-groups can be attended by experts other than members of the joint liaison group. There is provision for a steady development of the working of the group in a practical fashion. The group will remain a body of which officials from either side will be members. That is part of the nature of the group, and those officials will include those from the Hong Kong Government. These matters are precisely set out in the agreement.

Mr. Robert Parry (Liverpool, Riverside)

Regarding representation on the liaison group, the Foreign Secretary will be aware that people from Hong Kong should sit on it. Is that the position?

Sir Geoffrey Howe

I have made it clear that officials of the Hong Kong Government will be members of the group. Beyond that there will be provision for input from the people of Hong Kong. It is plainly important that that should be so.

I have a long speech to make to introduce the matter. My hon. Friend the Minister of State, Foreign and Commonwealth Office will be able to answer these questions in more detail when he replies. However, the point raised by hon. Members relates to a point that I wish to underline.

Our aim throughout the negotiations has been to secure an agreement that would be acceptable to the people of Hong Kong. The Government have known from the start that the House would certainly wish to be satisfied on that point. That is why we decided that an assessment office should be set up in Hong Kong to collate and analyse the views of the people of Hong Kong on the draft agreement. Their report, together with the report of the two monitors whom I appointed to observe their work, was published as a White Paper on 29 November. That White Paper is the second document that is before the House today, alongside the draft agreement itself.

The period of assessment in Hong Kong ended on 15 November. It was a considerable achievement that a clear and comprehensive assessment report, as well as the report of the monitoring team, should have been compiled, forwarded and published within two weeks so that it was available to hon. Members within a fortnight at the completion of the process. I should like to thank the head of the assessment office, Mr. Iain MacPherson, the two monitors, Sir Patrick Nairne and Mr. Justice Li, and everyone else concerned for completing their work in time for the House to receive their reports in that way.

I am glad to draw the House's attention to the conclusion of the assessment office, endorsed by the monitors, that most of the people in Hong Kong find the draft agreement acceptable". That is an authoritative, and most important, conclusion. It is based on careful analysis of the whole range of submissions and statements received. All the principal representative bodies in Hong Kong, along with the overwhelming majority of organisations and groups and most of the individuals expressing a view, accepted the draft agreement.

The overall picture from reports by and through the media was found to be one of general acceptance. The same view emerged from various independent opinion surveys. The independent monitors, who watched the work of the assessment office at every stage, confirmed that the office had performed its functions properly and impartially.

By any standards there has been a very vigorous and public debate on the draft agreement since it was published in Hong Kong. Over 3.5 million copies of the agreement were distributed in Hong Kong. The fact that more than 1 million of them were distributed by the New China news agency says something about the relationship within which the assessment was conducted. The assessment office received nearly 2,500 direct submissions, many from organisations representing a huge membership. That compares very favourably with previous exercises of consultation in Hong Kong.

The assessment office took into account 273 reports of discussions, debates, seminars, public speeches and interviews, and the results of 23 opinion surveys of various kinds. By any standards, it was a most thorough exercise in information and consultation.

One point on which a number of people commented in the course of this process was the fact that the draft agreement could not in any case be amended. I want to deal directly with this.

The normal practice in negotiating international agreements is that, once they have been initialled, they are not open to amendment. There is good reason for that. It is that in such cases any attempt to change the draft agreement would risk disturbing the whole delicate balance that had been established. So it was in the present case. That is why we took such trouble to consult the Executive Council at every turn during the negotiations, and that is why I made statements on my two visits to Hong Kong in April and July. In that way, we offered the people of Hong Kong opportunities to comment on the likely shape of the emerging agreement. Characteristically and rightly, they took advantage of those opportunities.

Subsequently, the assessment exercise has enabled people in Hong Kong to express their anxieties about the completed draft agreement. The report gives a clear account of them. That will be of enormous value to us during the process of implementing the agreement in the years ahead and during the discussions we shall have in the future with the Chinese Government through the joint liaison group. That has been an added advantage of the whole exercise.

I shall now deal with one or two other matters which have attracted attention. The first is nationality. It was one of the most difficult subjects in the negotiations. Because it is also a matter which affects people in their personal lives, it gives rise to very strong emotions. It was not easy to reconcile the conflicting interests involved.

Nevertheless, I believe that what has been achieved is a reasonable answer to the problems. The Chinese Government were not prepared to agree that anyone born in Hong Kong after 1997 should acquire British nationality by virtue of their connection with Hong Kong.

What we have achieved is agreement with the Chinese Government on measures which will mean that those who are British dependent territories citizens before 1 July 1997 can retain during their lifetime an appropriate status, which by definition will be a form of British nationality. As with their present status, that will not entitle them to settle in the United Kingdom. But it will enable them to use a British passport and so to avail themselves, except in Hong Kong and China, of British consular protection.

Those arrangements have been set out in a draft exchange of memoranda which, although they are not part of the agreement itself, were agreed between the two sides and published alongside the agreement.

We were not able to provide that those persons who had been British dependent territories citizens before 1997 should transmit that status to their children for one generation thereafter. Obviously, I recognise that that has been a disappointment to many people in Hong Kong.

Mr. Andrew Faulds (Warley, East)

Since that matter is not part of the agreement but is in an annex, would it be open to reconsideration in legislation, which must follow, about British nationality?

Sir Geoffrey Howe

I should not like to give the hon. Gentleman the impression that that could be open to consideration. I know from observations that he and other hon. Members have made in the past that the matter has been regarded, understandably, as being of importance. During negotiations transmissibility was unattainable. The compromise which was arrived at was the best that could be achieved. I have no doubt about that.

The second issue that I want to mention is the stationing of Chinese forces in Hong Kong after 1997. Under the agreement, defence is a matter for the Central People's Government. However, the agreement clearly provides that the special administrative region government will have full responsibility for the maintenance of public order and that forces sent by China for the purpose of defence shall not interfere in its internal affairs. I am confident that the Chinese Government are aware of the sensitivities in Hong Kong on this matter, and that they will act prudently.

I have one final point about the agreement. Some have asked whether there can be any guarantee that the Chinese Government will keep the agreement. There is no such thing as absolute certainty in relations between sovereign states. But I believe that we can all have confidence that the agreement will be observed. I say that for the following reasons.

The best guarantee of a country's performance is its own self-interest. The House will need no reminding of the United Kingdom's strong interest in adhering to this agreement and making sure that it works. China has a matching interest. First, China has and is likely to continue to have strong economic reasons for wishing to see Hong Kong remain stable and prosperous. Secondly, and perhaps even more important, the whole course of Chinese reunification, which has always been a central policy of the Chinese Government, is likely to be connected to the success of the agreement.

Both countries have given their commitment to the agreement. Both countries will wish to maintain their reputation by upholding the agreement in the spirit in which it was made.

It would be too much to expect that this document, which has emerged from extremely complex and sometimes difficult negotiations, could provide the whole answer to every problem. In some areas it will be necessary to elaborate the general principles set out in the agreement. One such area is the constitutional arrangements and government structure of the future Hong Kong special administrative region.

In that connection I welcome the White Paper on constitutional development which has just been published by the Hong Kong Government. It provides for substantial development towards representative institutions in the 1985 elections, and for the prospect of further development in this direction following a further review in 1987, which will consider also the question of direct elections. At the same time it rightly avoids sudden and dramatic changes, which could unsettle the very stability that all our efforts are designed to secure.

I have already told the House that we regard the next 12 years as crucial. We shall need to achieve progress in constitutional development. At the same time, we shall need to keep constantly in mind the unique circumstances of Hong Kong, and its future position as a special administrative region of the People's Republic of China.

Mr. Ivor Stanbrook (Orpington)

There is one important matter to which my right hon. and learned Friend has not referred, and which is referred to only briefly in the White Paper, and that is the position of the British expatriate staff in the public service of Hong Kong. Will my right hon. and learned Friend bear in mind that in the past, whenever a colony has achieved its independence, there has been a public officers' agreement, under which provision has been made for their future career prospects and pensions, and for compensation for loss of office arising out of constitutional changes? Will he give an undertaking that similar arrangements will be made for members of Her Majesty's overseas Civil Service in Hong Kong?

Sir Geoffrey Howe

I am grateful to my hon. Friend for raising that point, about which he has already asked several questions. As has been pointed out, the draft agreement in annex I, part IV provides satisfactorily for continuity of service by serving officers in the public service of Hong Kong on terms and conditions, including pay and pensions, that are no less favourable than before 1 July 1997. Those provisions apply to members of Her Majesty's overseas Civil Service serving in Hong Kong as well as to other civil servants.

The resumption of sovereignty over Hong Kong by the People's Republic of China raises similar issues in respect of Her Majesty's overseas Civil Service as independence did for other dependent territories. However, it is not possible to define now, 12½ years in advance of constitutional change, all the arrangements that will apply to members of Her Majesty's overseas Civil Service serving in Hong Kong and to payments of their pensions by the Hong Kong special administrative region after 1 July 1997. Thus, at this stage, I draw my hon. Friend's attention to the contents of the agreement, which he has seen. I understand his concern and I hope that I have shown our appreciation of it.

Sir Nicholas Bonsor (Upminster)

There is one other peripheral but important matter that I should like my right hon. and learned Friend to comment on, and that is the long-term fate of the Vietnamese refugees in Hong Kong. He will be aware of the difficulties that the Hong Kong Administration face in trying to place those refugees throughout the world, and of the Government's reluctance—having already done a great deal—to take any more refugees now. I should be grateful if my right hon. and learned Friend would confer with my right hon. and learned Friend the Secretary of State for the Home Department to ensure that we take some refugees, and that we make every effort to encourage other countries to do so.

Sir Geoffrey Howe

Again, I am grateful to my hon. Friend for raising that point. Of course, it goes a little outside the debate that I am now concerned with, in commending the agreement to the House. But in so far as it is within the scope of today's debate, I am sure that my hon. Friend the Minister will have something to say about it at the end of the debate. However, that point takes us on to rather different territory.

Mr. Neville Trotter (Tynemouth)

I think that my right hon. and learned Friend has set at rest the worry about the role of the People's Liberation Army within the region, as it will not be involved in internal security. But there is another worry, and that is that conscription might be applied. That worry should be set at rest as soon as possible. Might it not be a good idea to establish some internal security force for the policing of the frontier with the rest of China, so that young people in Hong Kong can serve in that body and not be in any way subjected to the possibility of conscription to the PLA?

Sir Geoffrey Howe

It is obviously important that the arrangements that are to be in place after 1997, whereby public order is the responsibility of the government of the special administrative region, should be considered and developed so far as necessary. Conscription is not mentioned in the agreement. The Chinese Government have not suggested that there will be conscription, and there is no reason to assume that there will be such a thing. I cannot say more than that at this stage.

Mr. Faulds

Will the right hon. and learned Gentleman give way on that point?

Sir Geoffrey Howe

I shall not give way. I must try to draw my remarks to a close, as I want other hon. Members to have a chance of taking part in the debate. I have said as much as I can now about the balance of factors that we have to take into account on constitutional development.

I believe that what has emerged from these negotiations is a bold and imaginative plan for the future of Hong Kong. The concept of maintaining two separate political, economic and social systems within one country is a farsighted one, which is closely associated with Chairman Dengxiao Ping himself. As a means of reconciling the apparently irreconcilable, it could have important implications for problems in other parts of the world.

I am greatly encouraged by the favourable reception given to this draft agreement internationally—and not least by the major industrialised nations that can play such an important part in Hong Kong's future prosperity. Indeed, 1997 will not just mark the end of an era in Hong Kong but more important than that, it will mark the beginning of a new era.

The success of this agreement will depend not only on China and the United Kingdom but to a very large extent on the people of Hong Kong and on their willingness to make it work. As the House well knows, they are resourceful and resilient people. I believe that there is every chance that in the 21st century Hong Kong will continue to be the striking financial, economic and social success that it is today.

We shall certainly continue fully, responsibly and effectively to discharge our obligation for the administration of Hong Kong until 1997. Thereafter we shall follow the fortunes of the Hong Kong special administrative region with the utmost attention and interest.

This is a debate about the future of Hong Kong and about the draft agreement before the House today. I close by saying that it is an honourable agreement. It is good for Britain and good for China. But far more important than either of those things it is good for the people of Hong Kong.

On behalf of the Government, I warmly and strongly commend the agreement to the House.

6.27 pm

Mr. Denis Healey (Leeds, East)

I thank the Foreign Secretary for that thorough and detailed presentation of the agreement. However, I regret the fact that the Government did not accept the Opposition's suggestion that we should have two days for this important debate. At the time we were grateful for the extension of the debate by two hours but, of course, we have already lost more than that owing to not unfamiliar incidents in the House after Question Time. Accordingly, I shall try to keep my remarks short, as many hon. Members wish to speak. It will be relatively easy for me to do so, because the House gave careful consideration to the background to the negotiations as long ago as May, and I think it fair to say that at that time there was a broad consensus.

In September, the Government published the draft agreement and I believe that it was clear then that there had been a combination of political realism and diplomatic skill in both the People's Republic of China and Britain that we all admired, and which I hope may be applied in some other areas on which the issue of sovereignty is of central importance.

When we discussed the agreement briefly in the House on 25 October the House was broadly agreed that the agreement as Lord Butler said, was "the best we have", and certainly better than might have been expected a few years ago. At that time, the House was disposed to accept it as such, subject only to the views of the people of Hong Kong, as assessed by the office set up for that purpose. Now we have the report of assessment office and of the independent monitoring team. I propose to confine my remarks largely to the findings in those reports and to some of the important issues that emerged with new clarity from them.

The report of the assessment office suggests that the people of Hong Kong have taken much the same view of the agreement as has the House of Commons. The report is decently honest about the problem of judging opinion in a territory that has never possessed representative government as we know it here. The assessment office was clearly disappointed by the relatively tiny response to its inquiries. Only one individual out of every 3,000 in the territory put in a written submission, and I suspect that Sir Patrick Nairne and Mr. Justice Li were right to say that that was partly because the office took a long time to assure the people that any opinion that they might submit individually would remain confidential and inaccessible to outsiders for ever.

It is somewhat disturbing that out of the 1,000 people who expressed a view on the acceptability of the agreement, as many as one in three opposed it. Nevertheless it is difficult to dispute the conclusion in the report that, given the fact that nearly all the people of Hong Kong acknowledge the inevitability of China having sovereignty in 1997 and the impossibility of changing an agreement made by two Governments outside Hong Kong, the agreement must be accepted.

I was somewhat surprised, however, by the Foreign Secretary's suggestion that it was not possible to change any international agreement that has been initialled. I had formed the impression that that is not the view of Her Majesty's Government in the case of the draft treaty on the law of the sea. Perhaps, when he replies, the Minister will comment on that.

We would all agree that the important thing is to ensure that the agreement is carried out as the basis for the continued prosperity and well-being of the people of Hong Kong. I suspect that the general view of the people of Hong Kong was summed up by one person quoted in the report by the assessment office, who said that the draft agreement is a post-dated cheque and that the result can only be known when it is proved.

Perhaps the most interesting summary of the situation is contained in paragraphs 23 and 24 of the report of the independent monitoring team. I hope that I may be allowed to read it—as they say in the United States—into the record: Nobody in Hong Kong can escape the uncertainties of the future: those who have, or can acquire, a 'right of abode' elsewhere will take personal precautions in the short term while hoping for the best in Hong Kong in the long term. The minority who reject the draft agreement do so either because they can never accept reunification with Communist China or because they are bitter about the consequences for themselves as British dependent Territories citizens. The majority who accept it do so chiefly because they regard reunification as inevitable and are relieved that the terms of the draft agreement are as good as they are. But the verdict of acceptance implies neither positive enthusiasm nor passive acquiescence. The response to the Assessment Office has demonstrated the realism of the people of Hong Kong. They know that their future now lies in their own hands. Some of the implications of that judgment on the findings of the assessment office are relevant to us in Britain. The House and the Government must take account of the clear misgivings that remain in Hong Kong. Both as a matter of honour and, I suggest, as a matter of British interest, we must accept our responsibility to do what we can to ensure that the agreement is successful, particularly in the 12 years before the resumption of sovereignty by the People's Republic of China.

There is a strong case for meeting the views of the Unofficial Members of the Legislative Council, at least so far as saying that the Government should publish an annual report that Parliament could debate. A firm commitment to debate every report would be perhaps unnecessary or even unwise, but the Government should make an annual report on developments in the territory and it should be open to the House, if it wishes, to debate it.

I hope that when we consider the legislation next year we shall be able to debate many of the issues that arise and to which the right hon. and learned Gentleman referred. However, some issues require special attention. There are the problems of the expatriate civil servants and of the Vietnamese refugees, which have already been referred to. I hope that the Government will take those problems seriously and will be able to allay some of the concern felt on those issues on both sides of the House.

A matter of even greater moral importance for Britain is that a substantial number of the people of Hong Kong served the British colonial Government in fields that could render them liable to victimisation in the future. I hope that the Government can give us an absolute assurance that those people will be guaranteed their future and their personal security.

There is also the problem of the British dependent territory citizens in Hong Kong. As the years pass, there is a case for giving somewhat fuller assurances on nationality and travel for those 2 million British dependent territory citizens. I gather from what the Foreign Secretary has said that, although this is not necessarily possible, it is not necessarily excluded. Not many of us would believe that it would be possible for any British Government to offer them all an automatic right of residence here. However, many of those people have skills and energies that could contribute greatly to Britain's economy and social progress. Having spent some weeks on holiday in California in August, I was immensely impressed by the contribution made by recent immigrants from Hong Kong, Vietnam, Taiwan, Korea and Japan to the stupendous growth of a state that is the size of Britain and has twice our annual national product. We should not be indifferent to the contribution that Chinese people from Hong Kong can make, although we cannot issue any blank cheque to accept as many of them as might wish to come here at any one time.

Mr. Parry

Does not my right hon. Friend accept the suggestion that, together with Commonwealth, NATO and the European Community, the Government might take the initiative to provide a haven for those who might wish to leave?

Mr. Healey

I was just about to refer to that proposal. I am glad that my hon. Friend is keen on it because I think that the suggestion is a very good one. The idea is that the Government should consider launching an international effort, drawing largely on members of the European Community, the Commonwealth countries and NATO, to assist in the resettlement of those who may wish to be resettled. I believe that the idea has been referred to as "operation Haven". I hope that the Government will consider that suggestion. The Minister of State may wish to say something about it when he replies.

There has been a dramatic change of opinion in Hong Kong about the joint liaison group since the idea was first mooted. Many people in Hong Kong originally saw the joint liaison group as an underhand mechanism by which Peking could get premature control over the territory. Those fears have been completely dispersed, and the joint liaison group is now seen in Hong Kong as a valuable instrument in ensuring the future development of the territory in line with the agreement. I take it that the Government also regard it in that light. It would be useful if some means could be found of associating the people of Hong Kong in the liaison group's work. We know from the draft agreement that the group will include officials of the Hong Kong Government and that there is some scope for evolution at a later stage, at least in the case of the working groups. I hope that Government officials in Hong Kong and the British Government will watch the possibility of development in that direction because there is no doubt that it would be greatly welcomed by the people of Hong Kong.

It is not unnatural that the people of Hong Kong would also like representation on the Chinese body that will draw up the basic law, but that must now be a problem for them to discuss with the Chinese Government. It is not essentially a problem that the British Government should discuss, once the agreement comes into force. Representation by Hong Kong on the joint liaison group or on any Chinese body that drafts the basic law raises what is still the most difficult issue concerning Hong Kong's future—whether its institutions can be given the power to reflect more accurately the views of the people of Hong Kong in the years before the change takes place. In other words, can Hong Kong move towards more representative government? That will not be easy in a territory in which there has been hardly any significant constitutional change for the past 100 years. Suddenly rushing the thing in 12 years is obviously open to real dangers.

We must test each step in the process before moving to the next to ensure that nothing that is done disturbs the political stability on which the economic prosperity of Hong Kong must depend. Through this agreement, the Government have a direct responsibility to the Government of Peking to deal with that problem in this way — I put it no higher than that. However, if any more representative system is to last, it is important that it should be in place well before the transfer of sovereignty. I assure the right hon. and learned Gentleman that I am fully aware of the problems that that raises and will be tolerant of any difficulties that the Government might encounter.

If the House accepts this agreement—I strongly hope that it will—and the Foreign Secretary and the Prime Minister sign it and it is passed into law in Peking and London next year, we shall be opening a new chapter in the life of some of the most vigorous, skilful and ingenious people who have ever been subjects of the British Crown. We are opening the new chapter under far better auspices than anyone would have believed possible only a few years ago. No other territory in the world is guaranteed 62 years of capitalist free enterprise by treaty. Some of us might regard that as a somewhat mixed blessing but it is not completely without precedent for a Socialist community to coexist with a capitalist one. Many of my right hon. and hon. Friends from north of the border will feel that that has been the problem of Scotland for many years. Although we hope to assimilate the rest of the United Kingdom with the Scottish model as the years pass it cannot come a day too soon.

As I have said, when we read the news that we get from Hong Kong and talk to travellers to Hong Kong and our colleagues who have visited the territory in the past six months, we find that everyone is impressed by the tremendous opportunities for external capital and enterprise in these new circumstances. They have been impressed by the fact that Japanese and American businesses are already gearing themselves up to take full advantage of competition with British businesses on what they regard as likely to be more equal terms than in the past. I hope that the Government will take every opportunity to press British businesses to be equally alert. Some of the princely hongs have shown far from the right spirit in their approach to the opportunities that now face them. I hope that their place will be taken by other British businesses with more energy and vision.

6.45 pm

Mr. Edward Heath (Old Bexley and Sidcup)

I commend most warmly the manner in which my right hon. and learned Friend the Foreign Secretary and those colleagues who have worked with him have conducted the negotiations. I should like to offer my full congratulations on the result that he has achieved. In my view he has been most successful.

This is a realistic agreement. It recognises the facts of the situation. I have always believed that the people of Hong Kong have recognised those facts. My plea to my right hon. and learned Friend is that he should continue with his present attitude and not allow himself to be diverted in any way from it. The temptations will be quite considerable — some of them have already been expressed today.

On 1 July 1997 we relinquish sovereignty over the island and the lease over the rest of Hong Kong. We shall then have neither sovereignty nor power and I beg my right hon. and learned Friend not by any sentence or phrase to give indications that will cause troubles for his successors when that time comes. That is fundamental in every respect. It is already being said that we must ensure that the agreement works, but it will not be in our power to see that it works. What lies in our power is to ensure that we carry out our side of the agreement. The rest will be in the power of Hong Kong and the People's Republic of China. I hope that that will always be at the forefront of my right hon. and learned Friend's mind and in the minds of his colleagues in the Foreign Office and the Government as a whole. To do otherwise would be unfair to the people of Hong Kong as we should be misleading them, and they would not then be able to make their own fair and responsible judgments about how to organise their future.

My right hon. and learned Friend rightly emphasised that Britain is responsible until the date of the handover. That alone puts great responsibilities on us. In the wealth of admiration which my right hon. and learned Friend and others expressed today, we should be foolish if we failed to acknowledge that Hong Kong has its problems, and great internal problems. I hope that we shall concentrate, for the remaining years of our responsibility, on helping Hong Kong to solve those problems. I do not need to go into them in detail as we all know what they are. Moreover, it is right to emphasise that Hong Kong now faces considerable competition from the rest of the Pacific. That has nothing to do with 1997 but derives from the fact that Singapore has emerged as an extraordinarily successful entity and is now linked up with Tokyo and Chicago, which Hong Kong is not. That is one of the elementary facts of financial life at the moment. If Hong Kong suffers from that it is not our fault, Peking's fault or the fault of the Foreign Secretary and the negotiators, but something that Hong Kong, with the aid of the British Government until 1997, has to resolve for itself.

I hope that we shall continue to do everything possible to help Hong Kong solve its problems and recognise that after 1 July 1997 we shall have neither sovereignty nor power. That affects nationality, which itself is complicated enough. The right hon. Member for Leeds, East (Mr. Healey) mentioned two groups whom we should look after and said that we might organise a European or world arrangement to accommodate those who wish to leave Hong Kong. I believe that that is impractical. I do not for a moment doubt the skill and drive of the people of Hong Kong—that is why I have confidence in their future. If we want to use some of that skill and drive, it is open to us to allow them to come to Britain without their having British or any other dependent form of British nationality. The question therefore does not arise. We should learn from the experience of the years in which we moved our colonies to independence but loaded ourselves with all manner of undertakings which we could not carry out afterwards and which became a source of grave embarassment to this country.

Mr. Healey

I think that the right hon. Gentleman has misunderstood my comments in two ways. The first group to which I referred were those whose work for the British colonial regime may render them liable to victimisation as time goes on. I hope that he will accept that we have a direct responsibility to give people who have served, for example in the police, the opportunity to come here before 1997, whatever their nationality status.

On the second point, I entirely agree with the right hon. Gentleman. I am not suggesting that we should give British dependent territory citizens a statutory right to live here. Like the right hon. Gentleman, I am saying that we should recognise that many of them could make a great contribution to our country by coming here and that we should be prepared to accept them, on a case by case basis, as the Americans have accepted hundreds of thousands of Asians from other western Pacific countries since the war.

Mr. Heath

I am grateful to the right hon. Gentleman for that explanation. His point about victimisation implies that the autonomous Hong Kong China Government will victimise people in Hong Kong. I am not for one moment prepared to accept that before the transfer of power in 1997 and it will not help the working of the agreement if we suggest that it will happen.

I have dealt with the Government of the People's Republic in private business in the City and I have always found them meticulous in carrying out agreements made since the revolution. International treaties and arrangements made since the revolution have also been meticulously observed. That should give us confidence that the same will be true of the agreement now before us, which I hope that the House will reaffirm today.

On the development of representative government within Hong Kong, I agree with the right hon. Member for Leeds, East that we must do our utmost to achieve proper, working representative government there by the time the handover takes place, but I cannot agree with the right hon. Gentleman's comments about not rushing things. With only 12 years to develop representative government, the question of rushing or not rushing does not arise. What I believe will do more harm than anything is the suggestion, as the tone of the White Paper implies, that we are doing this rather grudgingly. Post-colonial history shows that we have always suffered when we have seemed to be dragging out feet. There is always the argument that it would be so much better if these people let us go on ruling them because we do it so much better than they ever could, but not all of us share that view and the impression that we are only grudgingly making changes will be highly damaging to Hong Kong. My experience in talking to young Hong Kong Chinese is that they are anxious to assume those responsibilities, but that response to the assessment was low because they did not trust the present system to enable them to express their views safely and clearly.

Mr. Adley

I entirely agree with my right hon. Friend. Does he agree with me that there is likely to be more resistance to the change that he proposes from the Hong Kong Government than from the People's Republic of China?

Mr. Heath

Of course I do. My right hon. and learned Friend the Foreign Secretary will have seen the mass of advice from people in appointed positions who naturally enjoy their positions and will urge him to continue them rather than spreading responsibility too hastily. Far greater than any danger of haste is the danger of not having fully representative working government with experience by the time the handover takes place.

There is constant discussion about the stability of the People's Republic and of the administration in Peking, but no Conservative Member can deny that the direction of their agricultural policy in the past five years and now their industrial policy has been most satisfying. Of course there are aspects of the Chinese regime of which some people do not approve. That happens all over the world. Nevertheless, the direction adopted by the Chinese in agricultural and industrial affairs is certainly one that we can encourage and approve. The Chinese declaration about industrial policy could almost have been made in this House by my right hon. and learned Friend the Foreign Secretary, with occasional deletion of the word "Socialist" which had clearly been inserted to keep the ranks in order. It was a policy of enterprise, incentives and greater productivity, stressing that management must manage and that there should be good relations between unions and management and no interference from the Government. It says everything that my right hon. and learned Friend has been saying in various ministerial capacities for the past five years.

There is one way in which we can help, given our good relations with the People's Republic and the part that we are playing in its affairs. My right hon. and learned Friend's achievements as Foreign Secretary fully justify the decision of the Government over which I presided and of which he was a member to enter into full relations with Peking in 1972. One of the purposes was to ensure the best possible answer for Hong Kong when the time came.

The right hon. Member for Leeds, East said that we must acknowledge the interest being shown by the Americans and the Japanese in capital in Hong Kong. In fact, 50 per cent. of the capital in Hong Kong is already American, 35 per cent. is Japanese and only 5 per cent. is British. That is the situation now and there is nothing new or experimental about it. Moreover, nearly 50 per cent. of trade with Hong Kong is American, more than 35 per cent. is Japanese and only 7 per cent. is British. Clearly, therefore, the American and Japanese economic interest is far greater than our own in both investment and trade.

The area in which we can be helpful is in joint ventures with the People's Republic, by far the greater part of which currently go to Japan, with a small amount going to the United States and a very small amount to Europe, of which we get only a proportion. This goes beyond the sphere of my right hon. and learned Friend the Foreign Secretary. It means that the Treasury as well as the Foreign Office and, indeed, the Government as a whole must take a much broader attitude to investment in such joint ventures than it now does. If Dengxiao Ping asks why he should get his joint ventures from us at 11 per cent. or 12 per cent. when he can get them from Tokyo at 4.5 per cent., I cannot give an answer. No one here can answer that, but an answer must be found if we are to have joint ventures with the People's Republic and thus extend our influence, help the People's Republic to stabilise and thus help the people of Hong Kong.

I congratulate my right hon. and learned Friend the Home Secretary all the very hard work that he and his team have done, some of which I have seen at first hand, and I thank him for it.

Several Hon. Members

rose—

Mr. Deputy Speaker (Mr. Paul Dean)

Order. I remind the House that the 10-minute limit on speeches operates from 7 pm. I appeal for the co-operation of right hon. and hon. Members.

6.58 pm

Mr. J. Enoch Powell (South Down)

I do not think that it would be possible to query the wisdom of relinquishing our sovereignty over Hong Kong under the terms of an agreement such as that now before us. Whatever may be the future of that agreement—we cannot look 60 years into our own future, let alone that of China — the agreement is a remarkable achievement, which many would not previously have expected the Foreign Secretary and his colleagues to achieve.

I wish to refer to just one element which, I believe, is technically not part of the actual agreement. The Foreign Secretary said that the last four paragraphs were not part of the agreement. That section is entitled "Associated Exchange of Memoranda". As I understand it, this means that, having been notified of our intentions as set out in those paragraphs, the People's Republic of China raises no objection to them. The fulfilment of what is set out in those paragraphs is not, from its point of view, a condition to its acceptance of the rest of the agreement. From that it follows that this, and perhaps this alone of all that is set out in the White Paper is a matter which the House—and the country—is free to debate and decide for itself, since it concerns us materially, in the course of the legislation that will be laid before us.

In those paragraphs, the Government say that they will seek parliamentary approval for legislation to give a new status, with an appropriate title, to those who are now British Dependent Territories citizens by reason of their connection with Hong Kong, and those who will become such in the next 12 or 13 years.

It is true that the Government say that that status will not give them the right of abode in the United Kingdom. It does not. That is one of the absurdities and anomalies of a status which many of us thought should never have been created in the British Nationality Act 1981 and which has already had to be modified in the case of two of the territories to which it applied. But it is one thing for the Government to say that the new status will not give these people the right of abode in the United Kingdom. It is another to ignore the increasing pressure that will be brought to bear on the United Kingdom if we confer the kind of status adumbrated in this document, to admit its holders liberally and freely to the United Kingdom from Hong Kong in coming years, both before and after 1997. We would be foolish to underestimate the anxieties that exist or the pressures that may be deliberately engineered to that end in years to come. One can see the growth of such pressures already.

In September, The Times was writing: the British government should at least compensate for them"— that is, the terms of the memorandum— by giving as broad a definition as possible to those B.D.T. passport holders eligible to settle in Britain under the discretionary terms of the 1981 Nationality Act. After a few weeks that had become: Even though Britain is in no position to open its doors to such numbers we will have to be prepared to treat such an emergency, if it happens, with particular humanity and urgency. And today, in the same newspaper, we are told: The present generation will probably be granted British overseas citizenship, which does not give the right of abode in this country but implies an ultimate moral obligation on Britain if things go badly wrong. By what is proposed here we are incurring a virtually unlimited, though unacknowledged, liability to cede to pressure, a liability which could be of great consequence for our own future.

The Government have courted that result by the manner in which they have represented the new status. They have represented it as a continuation of the present British dependent territory status. In no circumstances could any status of the people of Hong Kong after 1997 be properly regarded as a continuance of their present status as inhabitants of a British dependent territory.

In the draft the Government have repeatedly referred to the travel documents that would be issued as "British passports". Now, we in the House may understand that a British passport issued to a British dependent territory citizen is not what the rest of the world would take it to be; but the rest of the world, and a great many of the people who will read this document, will think that a British passport means the same as a French passport— in other words, a passport the possession of which is equated with citizenship and with the rights of citizenship. It is a profound mistake on the part of the Government to use a concept and vocabulary that is bound to strengthen the internal and international pressures and to weaken the legal protections that we have against entry into this country where that has not been specifically decided in specific cases by the authorities of the United Kingdom.

I hope therefore that this proposal will be rethought, and will be rethought if not before, at any rate during, the course of the legislation that is to come before the House next year. The notion that the United Kingdom can confer a status that will outlast 1997 is itself the assertion of a falsehood. It represents the inadmissible division between citizenship and status on the one hand and sovereignty and power on the other. Where there is no sovereignty or power, there cannot be citizenship or status in any natural sense of the words. In this I concur entirely with what the right hon. Member for Old Bexley and Sidcup (Mr. Heath) said. We are in danger of adopting formulae at this stage which will be interpreted in the future in a way that will be a rod for our own backs, and will not be to the advantage either of those who might eventually be covered by it.

We have made such mistakes before. I see that in the document there is a reference to passports issued by the United Kingdom. We have been through all that painfully in past years, when we found that the act of issuing passports by an authority responsible to the United Kingdom Government was interpreted as conferring all the rights naturally inherent in citizenship itself. As a result, we were held internationally as well as internally to be bound by the fact of the United Kingdom having issued passports to individuals, even though the citizenship possessed by those individuals was one that by our law did not carry the right of entry and abode to this country.

We have no need to make that mistake again. We are deceiving others and ourselves if we lay this foundation for a repetition of that mistake. I hope that reconsideration, in the context of the future legislation, will enable us to avoid it.

7.7 pm

Mr. Peter Temple-Morris (Leominster)

This is the best possible deal that we could get. It owes a lot to the realism of the people of Hong Kong, and the way in which they have accepted it, and the assessment team has said as much. Reality is the name of the game, and we salute the Hong Kong people for it.

I intend to make a short speech within the 10 minutes that are available to me. There are several realities. Reunification is unavoidable, and that fact has to be faced by all of us. Secondly, China has accepted, and we hope will go on accepting, the two systems. It is in her interest to do so. This point is absolutely crucial. It has been emphasised by both Front Benches, and will be emphasised again in the debate this evening. The crucial nature of this is that we must, in the 12 years to come, maintain the fact that it is in China's interest to make this a success.

The opportunities are enormous. I emphasise this, as it has not yet been touched on. That area of the far east is perhaps the premier potential growth area in the world. Europe has its difficulties, and it may be said that it has reached a plateau of achievement, although we are hoping it will get better, while the potential of expansion in the future in that area of the east is enormous.

China will want to control Hong Kong, and that point will play a vital role in all this. To think otherwise is to delude oneself. Therefore, there are two points. First, we must preserve the value of what China takes over, and the self-interest argument comes in there. Secondly, we must create positions and institutions which are reasonably compatible with the system that is due to take over Hong Kong. Therefore, everything that we do must be directed to that end. Positions and institutions that are reasonably compatible is all that we can achieve.

The future of democracy within Hong Kong is a delicate matter and it has been approached delicately in the debate so far. There is nothing sacred about democracy. It has not always worked in parts of the world where we have wished it to work and where we have introduced it. In many instances it has declined rapidly and in many others it has died. It is important, whatever the system, to get the Hong Kong Chinese into leadership positions whatever the system that prevails in Hong Kong between now and 1997. During the next 12 years we must create something that will continue beyond 1997.

The proposals for indirect elections are just about right. Again, this is a difficult and delicate matter. We must proceed slowly in the recognition that democracy is neither a Chinese nor a Hong Kong institution. Democracy is not exactly the main attribute of Hong Kong or the reason for its success. There are great dangers in undue speed. Those who advocate speed, such as the radicals, pressure groups and Hong Kong observers, perhaps strike some of us as being rather too western-oriented for comfort, and perhaps not the ideal people to advocate a lasting system beyond 1997. I am not deriding democracy. I am merely observing that it is necessary to be practical. [Interruption.] I notice that one or two great democrats have responded to my remarks. Perhaps they are amused by what I am saying, but there is a certain seriousness behind my remarks.

We must not divide a consensus community. Hong Kong is not and has never been an independent state. It has operated by consensus and we must not exacerbate the differences which might appear between the Nationalists and the Communists by pressing on too quickly towards a system which is based on direct elections. That is why indirect elections will be going quite far enough for the moment. There are Communists within Hong Kong and they have a close relationship with the mainland. They would not win in any direct elections and we should not cause them to feel that they should not compete. If we did, they would opt for abstention and perhaps eventually influence those who take over to dismantle the system that we have tried so laboriously to build up.

It is all-important that the United Kingdom continues its interest and support over the next 12 years. It is pleasing that so many hon. Members are present in the Chamber to demonstrate their interest in Hong Kong, and this interest must continue. Indeed, it must be seen to continue. It is only then that China will take sufficient interest in the Hong Kong Chinese. It is imperative that we give them an increasing role if the framework is to last and continue beyond 1997.

It is vital also to maintain confidence. If we fail to do so, the consequences and results will be dire. We all know that various individuals are, understandably, going to various boltholes. When they have the nationality that will result from those boltholes, they may return to Hong Kong. There is a vital middle ground of talent within Hong Kong that is responsible primarily for the continuation of its success. That talent will leave if we get things wrong. This terrible danger was apparent in Shanghai back in the 1940s and it has been apparent in other parts of the world.

If things start to go wrong, they rapidly become worse. That leads to corruption, "take while you can," and the entire edifice collapses. That is why confidence is so vital. It is necessary to maintain Hong Kong's freedom of operation bearing in mind the opposition and competition which it faces. If exchange controls were to be introduced, for example, in addition to other measures, confidence would be lost and the Hong Kong experiment would diminish to such an extent that it would be the end of the agreement which we have all worked so hard to achieve and which we want to make a success.

In maintaining confidence, there is no greater challenge than the liaison group. The issue has been raised with my right hon. and learned Friend the Foreign Secretary and his answers were rather blurred, although he pointed out the presence of the Hong Kong Government on that group. Within the agreement there is a facility for continuation to the extent that we can involve the Hong Kong Chinese, at least for the moment on the sub-committees. The liaison group will have a vital role in the next 12 years. Its contribution and its access to the basic law will be all important. It is the duty and role of the House—I hope that my right hon. Friend the Minister of State will be dealing with this in more detail than my right hon. and learned Friend the Foreign Secretary did—to ensure that we have the active and vital participation of the Hong Kong Chinese on the group rather than a load of Hong Kong Government luminaries.

7.17 pm

Mr. Eric Deakins (Walthamstow)

I agree entirely with the hon. Member for Leominster (Mr. Temple-Morris) about the need to maintain the confidence of the people of Hong Kong. I hope that this debate will not be the last occasion on which we have a major examination of the affairs of the colony. I hope also that we shall have regular reports from time to time that will enable us to show the people of Hong Kong that we are continuing to maintain our interest in what will remain for the next 12 or 13 years a British colony.

I shall address myself to two problems. One problem is that of democracy and the other is the international recognition of the agreement. We have had the Hong Kong Government's White Paper and there have been comments already on how far and how fast we shall go by 1997. I join those, including the right hon. Member for Old Bexley and Sidcup (Mr. Heath), who feel that by 1997 there should be in place in the colony a system of fully representative government. I believe that that will be in the best interests of the people of Hong Kong. I invite hon. Members to envisage a situation in which there is virtually no progress towards democracy in Hong Kong over the next 12 years. We shall then be handing over one authoritarian system of government to another. It will be much easier in those circumstances for the incoming Government and governor, if they wish, to make fundamental alterations irrespective of whether they are in accordance with the terms of the agreement. Their task in doing whatever they may wish after 1997 will be made immeasurably easier and smoother by the absence of representative institutions and government in Hong Kong which can represent fully to them the interests of the Hong Kong people. We need to have more representative government—that is, a majority of elected members of LEGCO and EXCO—but I do not presume to enter into the many arguments and discussions on the exact formula of the elections. That should be the guiding principle.

In paragraph 33 of the White Paper there is set out the issue of the powers, if any, that should devolve to the new Hong Kong Administration, the more representative Government. There is little point in making the Government more representative unless they have some powers with which to control the destiny of the Hong Kong people in the period up to 1997. The issue is uncertain and vague as it appears in the documents before us. I hope that we shall maintain the pressure on the British Government and the Hong Kong Government to make haste slowly during the next 12 years. That should be our theme and I hope that that will help the Hong Kong people to realise that we have their best interests at heart.

I turn briefly to the issue which has concerned me from the time that I visited Hong Kong earlier this year with a number of other hon. Members. We did so at the invitation of the Hong Kong Government. That issue is the international acceptability of certain of the provisions of the agreement. I refer in particular to the period after 1997. The agreement says that all ahould be well and that Hong Kong will be able to maintain its participation in GATT and its special status as a member of the multifibre arrangement. Both of those international institutions are vital for the future economic prosperity of Hong Kong.

If Hong Kong were unable to maintain its position within those two international institutions, its economic future would become very uncertain. That is recognised in the White Paper which is before us for provisional approval today and for approval by Britain and China next year in the form of legislation. The agreement is good, so far as it goes, but it does not go far enough. It may mislead people in Britain, China and Hong Kong about the need to take urgent measures to ensure that the special economic status of Hong Kong is recognised by other countries.

I invite the House to consider the economic climate in the world over the next 12 years. We have seen during the past 10 years, during which there has been the multifibre arrangement and other economic arrangements to benefit poorer countries, including Hong Kong, a climate of growing protectionism. I resist that climate and I intend to go on resisting it. Nevertheless, the mood of the House is that we need to protect ourselves much more. That mood is also evident in the United States and in other industrial countries. Therefore the international economic climate will not be very favourable towards concluding an international economic agreement for the continuation of Hong Kong's special status in GATT and the MFA.

The Foreign Secretary made great play— I do not blame him—of the fact that there agreement. However, all countries in the world recognise and applaud the agreement because it does not cost them anything to do so. Many countries are anti-colonialist. If the agreement ends colonislism, all well and good. Most countries are conscious of the value of friendship with the people's Republic of China, if only for economic reasons, because potentially in the 21st century China will be one of the largest markets in the world. Therefore, they do not want to lose any brownie points over the next 12 years.

The point we are asking them to accept is that this is not only an agreement between Britain and China over the future of Hong Kong. We are asking the community of nations in GATT and the MFA to accept that Hong Kong's special status should continue. It will require them to continue to make sacrifices, in the sense that we accept the obligations of the MFA.

Hong Kong also enjoys certain privileges under GATT as a dependent territory. In those circumstances, it is incumbent upon all of us in this House, and upon the British Government, together with the People's Republic of China, to map out a strategic campaign to ensure that at the appropriate time there is full international recognition and an agreement on these two issues well before 1997. That will be extremely difficult. At least two countries—the United States and France—will be very difficult to convince that the special status of Hong Kong under the MFA and GATT should continue after 1997.

During the last year there has been a row between Hong Kong and the United States over the rules of origin for certain goods and garments. That is a sign of the times. I believe that there will be forces in the United States—I use the United States as an illustration of a country where this issue has arisen during the last year—which will want to ensure that by 1997 the special economic status of Hong Kong should cease, because then it would revert to being part of mainland China for the purposes of the MFA. Unless China's quotas under these arrangements are increased, the net result will be to reduce the pressure on rich countries to take goods from countries such as Hong Kong, China and many other developing countries.

Under the MFA, I believe that there will be strong opposition from France and perhaps from other members of the European Community. I single out France because when the Foreign Secretary raises this issue at the Council of Ministers he will be told that this is an excellent agreement, that most of the members of the EEC welcome it and that they also welcome the fact that Hong Kong is to continue to enjoy a special economic status. However, when our Foreign Secretary, as I hope he will, tries to obtain a concrete agreement in the EEC recognising the special status of Hong Kong in MFA and GATT, I suspect that the French will say that 1997 is a very long way away, that circumstances may change, that there will be several different MFAs leading up to that point, that they cannot consider the matter properly and justifiably at this stage and that we should put off the negotiations until much nearer the time. However, when we get much nearer the time—1995, 1996, and 1997—I have no doubt that the French, and perhaps others, will drive a very hard bargain if we are to fulfil the commitment which is contained not merely in this agreement but in statements made by the Foreign Secretary in Hong Kong, Peking and in this House about the special economic status and international provisions for the economic future of Hong Kong.

I hope that the Foreign Secretary will take these points on board. I am extremely worried about the international economic status of Hong Kong. Everything depends upon that after 1997. The best we can do in this House is to ensure that we negotiate successfully on their behalf.

7.26 pm

Sir Peter Blaker (Blackpool, South)

The hon. Member for Walthamstow (Mr. Deakins) is quite right to stress the importance of obtaining acceptance of this agreement by the international organisations and by other countries which are concerned with economic and financial matters. I shall return later to that subject. I believe that the most important aspect of this excellent agreement is the evident acceptance by China of the basic principle that Hong Kong will be run after 1997 by the people of Hong Kong. Given the enormous difference between the two ways of life on the mainland of China and in Hong Kong, any attempt by China to run Hong Kong would lead to great difficulty.

Given that the acceptance by China of the principle of Hong Kong being run by its own people is absolutely sincere, I am optimistic about the success of the agreement. This is what the "one country, two systems" slogan means. From it flows most of the other important aspects of the agreement. China has accepted a self-denying ordinance. This shows that China understands that if it were to intervene in the day-to-day affairs of Hong Kong after 1997 it would risk the collapse of a structure which brings benefits not only to the people of Hong Kong but to the people of China. From the acceptance of that principle flow the other consequences in the agreement: a separate system of law and courts, private property, a separate currency, the fact that China will not take taxes from Hong Kong, and the separate membership of Hong Kong in GATT, IMF and the other organisations to which the hon. Member referred. There is also the remarkable list of 16 freedoms which will be enjoyed by the people of Hong Kong. They are set out on page 22 of the agreement. The agreement is a great credit to all those who have been involved in the negotiations.

I wish to say a word about the role played by my right hon. and learned Friend the Foreign Secretary. It is clear that in the summer of this year, when the negotiations were at a rather difficult stage, the personal intervention of my right hon. and learned Friend when he visited Peking was responsible for unlocking the door. I want also to pay tribute to his officials. They have made a wonderful job of the negotiations. I want also to pay tribute to the governor and to the members of UMELCO who have clearly advised the Government extremely well.

My right hon. and learned Friend was right to pay tribute to the Chinese Government as well because China has recognised its own interest. I say that as a compliment. It is not always that Governments recognise their real interests. It is very much in the interests of China that the agreement should work and it is very much in its interest that it has been made in such an excellent way.

But there are still some concerns. First, will the agreement last? We may ask what will be the system in the United Kingdom in 20 years' time. I do not know. I hope that it will be a country in which I will be happy for my children to live, but I cannot guarantee it. We cannot guarantee what Hong Kong will be like in 20 years' time, but we should have confidence in the agreement.

There are many reasons for that confidence. China has a good record in observing treaties which it has signed. It has even observed what it describes as unequal treaties which are responsible for the creation of Hong Kong. The whole thrust of China's economic development is encouraging because it is becoming more compatible with the system in Hong Kong. There are the special economic zones and we have now heard about the first peasant millionaire in China, which is encouraging. In addition, the great publicity which the Government of China have given to their first peasant millionaire is encouraging. That tendency is now spreading to the cities.

I cannot say that that trend is irreversible, but it is much more likely that the tendency towards liberalisation will continue rather than be reversed. I think that it is likely to be successful.

The Prime Minister, Dengxiao Ping, said that China proposes to remain open to the world. If that is its policy, there is only one place through which it can successfully be open to the world and that is Hong Kong.

Then there is the proposal that Hong Kong will have a separate status in all the international organisations to which the hon. Gentleman referred. It would be an outrage if our allies and friends—the French and the Americans—were to obstruct the proposal. It is an intolerable thought that they may do so. It may occur, but if it does I am sure that China, the United Kingdom and many of our friends will ensure that the proposals in the agreement are put into effect.

Then there is the important Taiwan factor and the example that Hong Kong will give for the proposed reunification of the mainland and Taiwan.

There are several matters about which concern has been expressed by the UMELCO delegation. One is the question of possible statelessness for some Hong Kong residents. I hope that when my hon. Friend replies he will say something more in addition to what was said by my right hon. and learned Friend the Foreign Secretary about that matter. The possibility of statelessness for some Hong Kong people is a matter of great concern.

An annual report to Parliament has been proposed. That was referred to by the right hon. Member for Leeds, East (Mr. Healey). That is a good idea and I hope that when my hon. Friend replies he will say that the Government propose to accept that.

There are two concerns which are much broader than those that I have just mentioned. They are the drafting of the basic law and the joint liaison group. China will understand the importance of closely associating the people of Hong Kong with the drafting of the basic law. I say that because of what I said at the beginning of my speech. China has understood that the prosperity of Hong Kong, which is so much in China's interests, depends on maintaining confidence among the people of Hong Kong. If the people of Hong Kong feel that they are excluded from the drafting of the basic law and that their views are not being taken account of, confidence will suffer. I am sure that the Chinese Government understand that as well as we do.

A similar factor applies to the joint liaison group. I note that there will be Hong Kong civil servants in the group, but I hope that it will be possible, at least over time, for unofficial people from Hong Kong also to be part of the group. That would be in the interests of not only the Hong Kong people but Britain and China. I see little conflict of interest between those groups in this situation. It is in all our interests that Hong Kong should be stable and prosperous in the future, and that is the greatest ground for encouragement.

7.34 pm

Mr. Russell Johnston (Inverness, Nairn and Lochaher)

It is one of the had things about the new 10-minute rule that it is difficult to intervene. I have been a great believer in giving way, but I give notice that on this occasion I shall not give way. That is bad because the fact that we give way in this Chamber is supposed to make us different from and better than continental systems where people make set speeches.

I reiterate the welcome that I gave to the agreement when it was announced by the Foreign Secretary and repeat my congratulations to him and my admiration of the remarkable approach made by the Chinese under Chairman Dengxiao Ping.

We are left with three basic questions. First, can Britain do anything about making the agreement stick in the spirit as well as the words? That has already been rehearsed quite a bit. Secondly, what should we do in the next 13 years about the internal administration while we still remain responsible? Thirdly, where does our responsibility stop to those Chinese now resident in Hong Kong, many of whom went there to escape the People's Republic of China and who fear reabsorption into it?

The right hon. Member for Old Bexley and Sidcup (Mr. Heath) said that we could basically do nothing to make the agreement stick. That is pretty important. As somebody said to me when I was in Hong Kong in October, the music is good but the song must be well sung. In other words, it is the implementation and practice that are important. I am sure that something can be done. One of the myths about sovereignty is that the decision-making process can be influenced only by a great power. One of the good things that the Government have achieved is to develop a close relationship with the People's Republic of China which gives them an opportunity to exert influence as things develop.

Britain has a special responsibility. We are not decolonising. It is not quite right to use that expression. Every time we have decolonised we have allowed people to decide for themselves what would happen and what form of Government there would be. That has not been done and we all know why. The Government have shown sensitivity, but in the years to come there will need to be a commitment to follow up matters. Various people have mentioned the idea of regular reviews. That was mentioned in the press at the weekend by Miss Lydia Dunn of the Legislative Council. It was also mentioned today by the right hon. Member for Leeds East. It is a good idea. But it is not enough to proceed on the basis that if the House wishes we shall have a debate on the annual report. The Government should commit themselves to a debate at least once a year to examine some sort of annual progress report so that we can monitor what is going on and so that we have the opportunity in the House to reassert the fact that we still have responsibility.

I am still not clear, despite the exchange with the Foreign Secretary, whether non-official people will be allowed on the joint liaison group. I gather they will not. I gather that they may be brought in for sub-committees. It may be that that is impossible, but the route through the sub-committees must be fully utilised.

The drawing up of the basic law has been mentioned by many people and undoubtedly it will be done on behalf of the Hong Kong people by the Chinese. The Foreign Secretary said that the Hong Kong people have been offered consultation. They deserve participation, which is different from consultation. That is a view that could well be conveyed to the People's Republic of China. After all, we have paid tribute to the People's Republic of China for going along with an agreement of remarkable flexibility. It is right to stress that that will be for the benefit of the People's Republic as well as Hong Kong. It may open the door to a resolution of the problem of Taiwan and certainly it has economic significance.

As everyone has said, it will be a bold person who claims that the economic modes and modules in the People's Republic of China, Hong Kong or the United Kingdom will be recognisable 50 years from now. It is a matter of trust.

What should we do about democratic institutions in the next 13 years? How fast do we move and what do we do? The agreement states: The Government of the Hong Kong Special Administrative Region will be composed of local inhabitants. The chief executive will be appointed by the Central People's Government on the basis of the results of elections or consultations to be held locally. There is no guarantee of elections. I expect that the People's Republic will accept the structure that it inherits.

I agree that we must make haste in the next 10 years, but it must be done with care because everything depends upon Hong Kong's economic success, as the right hon. Member for Leeds, East (Mr. Healey) has said. That does not depend only upon how ingenious and effective people are in Hong Kong. It depends upon the world economic situation. As the right hon. Member for Old Bexley and Sidcup said, Hong Kong's exports are heavily concentrated in certain places and its economic position is fragile.

The question of nationality arouses strong passions. The Foreign Secretary said that "statelessness would not happen." I should like to be assured that that applies to the Portuguese, the Indians, the Parsees and other minority groups. I hope that they will have documentation to give them statehood.

What about the Vietnamese? The Foreign Secretary said that their problems were not the point of the debate, but they live there. I visited Hong Kong with the hon. Member for Warley, East (Mr. Faulds) in October. The flow of Vietnamese refugees continues. This year, 1,535 have arrived in 63 boats. They are allowed in and are not turned away. By the end of this year about 12,500 Vietnamese refugees will be living in Hong Kong. They keep coming and we do nothing about it. The Minister should comment on that. They cannot be left in camps for ever.

The right hon. Member for Leeds, East mentioned the sensitive areas—the police and those involved in security. We remember the riots in 1967. The people involved in security and the Communists are still there. Old grudges might be settled. The right hon. Member for Old Bexley and Sidcup said that there would be no victimisation. That is a trusting view for a man who claims to be a practical chap.

I shall not dwell on the question of the expatriates, but they are worried about the future of their pensions arid their security.

What about the main body of people—the 2.5 million who are British dependent territory certificate holders? It is not practical to say that we shall let them all in. The right hon. Member for South Down (Mr. Powell) would not allow that. Yet consider what Hong Kong has done. After the second world war 600,000 people lived there. After the 1949 uprising there was a tremendous influx followed by a steady flow and 2.5 million people were absorbed in an area of 393 sq miles, much of which is hill or island. My constituency comprises 4,900 sq miles. The United Kingdom does not lack space, but it lacks a tolerance to absorb other people. That is a fact that we have to face. I am not especially proud of it, but I recognise it.

The Government must concentrate on ensuring that people do not receive passports which are in any way devalued and that such passports give them access and entry—

Mr. Deputy Speaker Mr. Ernest Armstrong)

Order. The hon. Gentleman must bring his speech to a close.

Mr. Johnston

I shall take one minute.

Mr. Deputy Speaker

The hon. Gentleman must not take one minute. We are under orders and his 10 minutes are up.

Mr. Johnston

Then I commend the agreement, and I am sorry that I could not say more about it.

7.45 pm

Sir Paul Bryan (Boothferry)

Many of us have already found opportunities to congratulate the Foreign Secretary, the Governor and the negotiators of the draft agreement. I do so again. I now want to congratulate the people of Hong Kong and their representatives—the members of the Executive and Legislative Councils. One has only to read the agreement and the long "Elaboration of basic policies" that goes with it to realise that the Chinese negotiators were much influenced by the UMELCO paper published when we last debated the subject in May, and, I have no doubt, by the UMELCO delegation to Peking.

The Chinese have been just as keen as we to gauge Hong Kong opinion. In the last two years scores of prominent Hong Kong citizens have been asked to go to Peking, many of them to meet Deng himself. Hence an agreement that has surprised us by the degree of its detailed understanding of the financial and social set-up in Hong Kong has emerged.

In our last debate, several right hon. and hon. Members went out of their way to argue that as UMELCO is not an elected body like the House of Commons it could not represent the Hong Kong people. I ask the doubters to read the assessment office report which summarises the debate in the Legislative Council. The views expressed in that debate are completely in tune with reports from hundreds of individuals and organisations reporting to the assessment office. Originally I had doubts about the creation of the assessment office. In the event, I and many others were wrong.

The Hong Kong Government are to be congratulated on the thoroughness with which they sought public opinion. they circulated 2½ million copies of the draft agreement in two languages within a few days. They undertook the massive job of collecting and collating all the evidence. No such operation has ever been attempted in any other country.

The report is a valuable document. The range and number of contributors gives it credibility. Written evidence came from about 1,800 individuals. That may not seem many, but people do not often hurry to put pen to paper unless they have something to grumble about.

I was most impressed by the reaction of the network of 679 organisations and groups from all levels of society which permeates Hong Kong and covers every sector of the community. Because of that range of interest, in effect the report goes through the draft agreement with a fine tooth-comb. It provides the one and only systematic record of Hong Kong opinion at this critical point in the territory's history. It will be read by foreign Governments and, in particular, by serious long-term investors. It will certainly be read by the Chinese and referred to by the joint liaison group.

In the debate in May we looked forward to today's debate as the time to discuss whether the draft agreement had the approval of the people of Hong Kong. That question has now been settled by the overwhelming message of acceptance accompanied by, of course, a list of reservations, qualifications and questions which must be clarified or resolved in the years ahead. Let nothing I say tonight be taken to under-rate the seriousness of the problems yet to be solved.

I can find no better interpretation of the Hong Kong verdict than the last words of the report of the monitors, Mr. Justice Simon Li Fook Sean and Sir Patrick Nairn to whom we should be very grateful. They said: The majority who accept the agreement do so chiefly because they regard reunification as inevitable and are relieved that the terms of the draft agreement are as good as they are. But the verdict of acceptance implies neither positive enthusiasm nor passive acquiescence. The response to the assessment office has demonstrated the realism of the people of Hong Kong. They know that their future now lies in their own hands; and the widespread concern to be involved in the drafting of the basic law is a timely and important token of their wish to stand increasingly on their own political feet. That interpretation leaves us with much to do during the next 12 years. More and more people are turning to the prospect of the basic law which they expect not only to reflect the draft agreement but to solve outstanding problems. There is an increasing call that Hong Kong people should not only be consulted but participate in the drafting of the basic law. Members of UMELCO have. advocated a basic law advisory and monitoring committee". I doubt whether the Chinese will concede any such formal arrangement, but the way in which the draft agreement has so accurately reflected Hong Kong views gives me hope that the Chinese will take the trouble to ensure that the basic law does the same. The Chinese must know that they will need practical help from the British and the people of Hong Kong in drafting the law—something in which they have no experience.

What time must I finish, Mr. Deputy Speaker?

Mr. Deputy Speaker

At 7.56 pm.

Sir Paul Bryan

In the UMELCO paper with which hon. Members have just been issued—the paper is in the House of Commons Library—fears about the implementation of the agreement and the policies of future Chinese leaders come high on the list. Those fears were well answered by Miss Lydia Dunn in the Legislative Council debate, when she gave six reasons why she believed that the terms of the agreement would be faithfully implemented. Judgment on that front made by leading citizens in Hong Kong seems to be more convincing than anything we can say in this Chamber.

Earlier this afternoon, my right hon. Friend the Secretary of State for Education and Science undertook to reconsider his plans for a reduction in student grants. I warn him that, if his recommended economies include a reduction in overseas student grants, that would be politically disastrous in Hong Kong. The present scheme, financed in part by the Hong Kong Government, is going well, and any tampering with it would be regarded as a sure sign of declining British interest in the territory.

In our long and unique colonial history, we have never experienced a transfer of sovereignty compared with this one. With our other colonies, we have usually found virtue in handing over the reins of power at reasonable speed, leaving unsolved problens for the incoming Government to face. Often, those Governments faced a pseudo-Westminster system of government unsuited to their circumstances.

This time we have 12 long years. The responsibility is all the heavier on British shoulders. In the words of the UMELCO statement, Given that Hong Kong will be a special administrative region within China after 1997, with an elected legislature enjoying a high degree of autonomy, it is essential that a Government structure consisting largely of local people is in place and in proper working order well before 1997. I stress that last sentence. That does not necessarily mean direct elections or any other preconceived system which happens to have worked in some other part of the world. We must develop a system that is tailormade to bring stability and prosperity to Hong Kong in its new and particular circumstances. With that objective firmly in our sights, I believe that the White Paper on the future development of representative government in Hong Kong is about right. I agree with this step-by-step approach. The steps should be quick and not too long. All the time we must ask ourselves, "Is the developing system attracting new talent and new leadership into government?"

7.55 pm

Mr. Jack Ashley (Stoke-on-Trent, South)

The hon. Member for Boothferry (Sir P. Bryan) spoke with great knowledge of Hong Kong, and hon. Members listened to him with respect. A few weeks ago, I visited Hong Kong and China. It was interesting to compare the reactions in the two places. In Hong Kong there was a welcome for the agreement but some reservations about the future. The agreement was enthusiastically acclaimed in China. There is no doubt about the fundamental importance that China attaches to this agreement, because to the Chinese the agreement is a recognition of the geographical, legal and emotive issues. They are completely committed to it. Although most Hong Kong people accept the agreement, it is essential for us to recognise frankly the different reactions of Hong Kong and China.

The reasons for some disquiet in Hong Kong—I put it no higher than that—have been expressed clearly since the initialling. Naturally, the Hong Kong people feel deeply about this matter because their way of life and community are involved. No one else is involved. I am glad that the Foreign and Commonwealth Secretary has given assurances that the people of Hong Kong may participate in the drafting of basic law and will be adequately represented on the joint liaison group. There is some anxiety about possible restrictions on individual rights and freedom and about passports for British dependent territory citizens. I hope that those anxieties will be considered carefully.

It is only fair, and certainly important, to recognise China's point of view and its problems. A capitalist Hong Kong within the territory of China could place great strains on the whole of Chinese society. We should appreciate China's difficulties. The fears of some Hong Kong people may be unfounded, because there are many good and varied reasons for believing that the Chinese are acting in good faith and will scrupulously carry out the agreement. The Chinese habitually keep their word, and they have an excellent record for keeping international agreements. The Chinese had no need to sign this agreement, and, if they wanted, they could long ago have taken Hong Kong. We must recognise that fact.

The Chinese recognise Hong Kong's unique value, and they have been reasonable during the negotiations. They value their standing in the world as men of their word. The Chinese are great realists. As realists, they have Taiwan clearly in mind. Obviously, an acceptable and accepted settlement in Hong Kong could pave the way to a settlement on Taiwan with great political and economic implications for China. By proving the fears of the Hong Kong people to be groundless, the Chinese can maintain the special value of Hong Kong. A large part of the success of Hong Kong has been built on confidence, and if that confidence is seriously damaged, the unique value of Hong Kong will be damaged. By sustaining that confidence, China can preserve and enhance the value of Hong Kong. I believe that China will do precisely that.

The Foreign Secretary and the Governor of Hong Kong deserve great credit for the success of the negotiations. I have no doubt that they benefited from the wise and valuable counsels of Sir Percy Cradock, and I am very glad that the Foreign Secretary referred to him. But the brilliantly imaginative stroke was not British; it was Chinese. I pay tribute to Chairman Dengxiao Ping, for his startling concept of "one nation, two systems". That provided the breakthrough. Making a success of that concept will provide the great challenge for the future.

In meeting that challenge, the Hong Kong Government have a vital role to play in preparing for 1997. Clearly, the most important aspect will be to involve the people of Hong Kong in decisions affecting them and their children. The Hong Kong Government have operated a different form of government from our own, but their record is a splendid one. The Hong Kong Government have enjoyed outstanding administrators such as Sir Jack Cater and many others who have made a notable—indeed, a historic—contribution to Hong Kong. They have done that under a type of colonial Government that we no longer accept in Britain. Incredibly, it has survived in Hong Kong. But the time has now come for Hong Kong to adapt to the historic changes that are soon to take place in Hong Kong.

I have heard it suggested that the British system of adversarial politics should be implanted in Hong Kong. That is a wholly unrealistic concept and fails to take account of the political delicacy of the situation in Hong Kong. It would be a "bull in a Hong Kong shop" approach which would be wholly inappropriate for Hong Kong. I do not believe that it would work.

We want to see progress in Hong Kong. What is now required is an imaginative approach—something as realistic and shrewd as Dengxiao Ping's "one nation, two systems" concept. I cannot pretend that I have the answer or that anyone so far has found the answer, but there must be a greater involvement of the people of Hong Kong in the Government. The form of involvement should be decided not by the British Government or by the Hong Kong Government, but by the people of Hong Kong themselves.

The great challenge for the people of Hong Kong today is to produce political leaders. There has been no role for political leaders in the past in Hong Kong, but they are greatly needed now. I hope that people who believe in the future of Hong Kong will come forward. I appreciate the complexities of the situation there, but those people, who will become the political leaders of Hong Kong, can play a major role in their own destiny. Hong Kong needs to move forward to new forms of government which manage simultaneously to give continuity and to preserve posterity, and which are consistent with the new arrangement with China.

Whichever way the problems are tackled, it is of paramount importance for the British Parliament to maintain a very close interest in the affairs of Hong Kong. It will be even more important now than ever before to have more regular debates about the affairs of Hong Kong. Without that interest, Britain will be unable to fulfil its final role in Hong Kong and will be throwing away a valuable opportunity to mould the future of Hong Kong. By regular debates, Britain can remain involved in the developing process of Hong Kong after the signing of the agreement, and can play a major and significant role in the long-term future of Hong Kong.

8.5 pm

Mr. Peter Thomas (Hendon, South)

I apologise, in his absence, to my right hon. and learned Friend the Foreign and Commonwealth Secretary for not having heard his speech in full. I heard the end of it. I was unable to hear the whole of it because I was in a Select Committee.

From the debate so far it is clear that there will be overwhelming support in the House for the draft agreement. That is absolutely right. I join in the congratulations that have been given to my right hon. and learned Friend, to the Governor of Hong Kong, and to all the people who have been associated with the remarkable and superb draft agreement. It is unique, in that it brings together two sovereign countries with totally different approaches to economic life. They have come together in a realistic way in a historic agreement. Everyone concerned with it deserves the highest possible praise.

Few speakers in the debate so far have gone into any detail. How remarkable it is to find, in the elaboration by the Government of the People's Republic of China of its basic policies, the words: The National People's Congress of the People's Republic of China shall enact and promulgate a basic law of the Hong Kong Special Administrative Region of the People's Republic of China…in accordance with the Constitution of the People's Republic of China, stipulating that after the establishment of the Hong Kong Special Administrative Region the socialist system and socialist policies shall not be practised in the Hong Kong Special Administrative Region and that Hong Kong's previous capitalist system and life-style shall remain unchanged for 50 years. How remarkable it is to find phrases such as that in an official document of a Communist country. The current social and economic systems in Hong Kong will remain unchanged, and so will the life style, rights and freedoms, including those of the person, of speech, of the press, of assembly, of association,…of correspondence, of travel, of movement, of strike,…of choice of occupation, of academic research, of belief". Those rights will be ensured by law in the Hong Kong special administrative region. Private property, ownership of enterprises, the legitimate right of inheritance, and foreign investment, will be protected by law. With such wonderful phrases, how could anyone not say that it is a remarkable and admirable document?

Therefore, I have no hesitation in giving my support to the agreement. I have no doubt that I shall be in very good company, in as much as all hon. Members in all parts of the House will be with me.

I listened with great interest to the speech of the right hon. Member for Leeds, East (Mr. Healey). He was absolutely right when he referred to the report of the assessment office. That clearly shows that there has been general acceptance of the draft agreement in Hong Kong. All the representative bodies have endorsed it, and there is a sense of enormous relief in Hong Kong. Two years ago people were extremely concerned, but there is now a sense of real relief and a determination to make the agreement work. I have no doubt that it will be extremely successful.

I appreciate that certain misgivings remain and that people will have reservations, but these are far fewer than many people anticipated. I am sure that some of them will be dealt with in the next 12½ years.

The continuing interest of this House will be important, and I am certain that over the next 12½ years the Government of the day will realise that they have a continuing responsibility for Hong Kong, which will be of major importance up to 1997. I have no doubt that the Government of the day will, before the end of this period, continue to carry out their paramount duty.

It is also important that this House should interest itself continually in Hong Kong. An annual report to the House on Hong Kong, perhaps followed by a debate, would be one way of ensuring a continuing interest in the fortunes and progress of Hong Kong.

The agreement makes it clear that the drafting and passing of the law will be done by the People's Republic. It is important that considerable assistance should be given to the People's Republic in the drafting of this basic law. I have no doubt that certain lawyers and officials will assist, but it is equally important that the people of Hong Kong should be involved. That is of major importance.

Vast changes will take place during the next 12½ years. Something like 100 Privy Council orders apply to Hong Kong, and they will have to be incorporated into Hong Kong law. The basic law will also incorporate the agreement. Therefore, it must be well drafted, and it is important that everyone with an interest should get involved and help the Chinese.

Several hon. Members have also referred to the possibility of more democratic representation in the Hong Kong assemblies—be it the Legislative Council, the Executive Council or whatever. In the main, this relates to the Legislative Council. There is no doubt that when the chief executive takes over at the end of 1997 or before that, he will have to be supported by a more representative council.

I am inclined to support what the right hon. Member for Leeds, East said. I do not support the views of my right hon. Friend the Member for Old Bexley and Sidcup (Mr. Heath). It would not be right if we tried to get the Hong Kong people to enter in a hurry into a form of democratic representation which is similar to western democratic representation. There is no history of that type of representation in Hong Kong, which has been a colony, nor is there such a history in China. If, out of enthusiasm, we try to introduce the form of democratic politics in this country into Hong Kong, we may well cause enormous suspicions and difficulties with China.

I do not know whether there can be democratic elections without political parties, but there may be trouble if, side by side, there is a Right-wing national party and the Communist party. This matter should be left to the people of Hong Kong, who see themselves in a unique situation. They should decide the pace at which they wish to have greater representation in their legislative bodies. That is the general wish in Hong Kong. The White Paper sensibly paves the way in accordance with the traditions and situation in Hong Kong.

Above all, stability and prosperity must continue. If in the next 12½ years anything happens to upset that, the value of Hong Kong to China will be diminished. That could well result in a total change and something very different from what people hope for.

I pay tribute to the Chinese who have agreed to this draft agreement and who have worked so hard to make it sensible and realistic. The Chinese have shown that they keep agreements. I therefore have no doubt that it will be in their interests—indeed, it will be their intention—to keep this agreement absolutely to the letter of the law.

8.16 pm

Mr. Robert Parry (Liverpool, Riverside)

My recollection is that this is the third or fourth debate on Hong Kong in which I have participated. In previous speeches I have been critical of the social system in Hong Kong, the lack of democracy and the repression of civil liberties in this last bastion of British imperialism.

Tonight we are debating the draft agreement on the future of the colony. Previously I have said that I have always accepted that in the last century Hong Kong was colonised under unequal treaties, and that it was inevitable that it would return to China in 1997.

The draft agreement has been broadly accepted in Hong Kong. Mrs. Elsie Elliott, an elected member of the urban council for many years, who has been in touch with the real grass roots in Hong Kong, supports the White Paper. She made that clear in an urban council debate earlier this year. It is also supported by the Heung Yee Kuk, which represents the people from the New Territories. If Mrs. Elliott is prepared to accept the draft agreement, that is good enough for me.

I welcome the decision to set up the special administrative region of Hong Kong, which will receive a high measure of autonomy. Last Monday, along with a number of other hon. Members from both sides of the House, I met a number of members of UMELCO, which has sent a delegation here to lobby hon. Members. They have raised some questions on the agreement. One is that the people of Hong Kong should not only be consulted but should actively participate on the drafting of the basic law. I agree.

They believe as well that the Hong Kong people should also sit on the Sino-British joint liaison group. That is also right. I do not accept that only expatriates or colonialists should sit on this group. The Hong Kong people have the right to sit on this group as it will deal with their future. If such people are unable to sit on the group now, I hope that they will be able to do so in the years ahead.

I do not believe that UMELCO should try to act as spokesman for the ordinary people of Hong Kong. A number of UMELCO members are at present in the Gallery listening to this debate. In the main they are wealthy or middle-class professionals who claim to speak for the masses but speak only for themselves. I have received many letters from people in Hong Kong and I have seen many reports in the papers which make it clear that UMELCO does not represent them. It is a pity that they were not campaigning with me, my hon. Friend the Member for Falkirk, West (Mr. Canavan) and the hon. Member for Christchurch (Mr. Adley) many years ago when we argued for democracy, basic civil rights and consultation with the people of Hong Kong. UMELCO members are visiting London at the expense of Hong Kong taxpayers. Yet people like Dr. Ding, Mrs. Elliott, Mr. Tsin Sai Nin, Mr. Andrew Tu, who represent the grass roots, must pay to come over here from their own pockets.

It is interesting that during the summer recess we saw an unprecedented number of hon. Members visiting Hong Kong. Those visits were also paid for—by Hong Kong tax payers. Over the years few hon. Members, with the exception of my hon. Friend the Member for Falkirk, West, have argued for democracy, tabled early-day motions, or taken part in deputations to the Foreign Office to argue for human rights and civil liberties.

I wish to raise the matter of Chinese troops being based in Hong Kong until 1997. Some UMELCO spokesmen raised the matter. It is made clear in the draft agreement that Chinese troops will be based in Hong Kong. Paragraph 42 on page 36 of the White Paper makes it clear that British troops will be withdrawn and that military forces Sent by the Central People's Government to be stationed in the SAR for the purpose of defence will not interfere in its internal affairs. I hope that there will not be a need for a heavy military presence in Hong Kong. Obviously, the People's Republic has the right to base its troops there, if it wishes. The young people of Hong Kong may be asked to volunteer for the forces. I was pleased when the Foreign Secretary said that during the discussions there was no talk of compulsion in bringing people into the army in Hong Kong.

On the question of citizenship, I support the suggestion that I made earlier to my right hon. Friend the Member for Leeds, East (Mr. Healey). He agrees with me about a possible haven for people who may not wish to stay in Hong Kong. A couple of academics from St. Anthony's college, Oxford, raised the matter. The United Kingdom Government should take the initiative in launching an international effort, especially among the EEC and the Commonwealth and members of the NATO alliance to bring into being an operation haven. This will provide funds for co-ordination and resettlement and quotas in a large number of participating countries, to permit those holders of British dependent territories passports in Hong Kong as well as minority nationality passports and travel documents holders in Hong Kong, to settle in those countries abroad if they so wish. I hope that the Minister will consider that point.

Will the Minister ask the Hong Kong Government between now and 1997 to make a positive attempt to improve services in Hong Kong, which affect masses of the people? I am thinking of housing. Thousands of people are homeless or living in boats. I hope that for housing, social security, pensions, social services, welfare and the health service, the Hong Kong Government will make a positive attempt to improve them without prodding from the British Government to do the right thing.

During our last debate I spoke about the freedom of conscience, religion and association. This is dealt with in paragraph 46, page 37 of the White Paper. I mentioned that the Catholic Bishop of Hong Kong was concerned with what may happen in the colony after 1997. In China there are many christians, Catholics and non-Catholics, bishops and priests who have been held in prison for many years. I hope that every effort will be made to guarantee that after 1997 those people will have the right to freedom of religion.

8.25 pm

Mr. David Howell (Guildford)

I fully share the admiration expressed on all sides for the work of the Foreign Secretary and his team in securing the agreement. There is no doubt that in difficult circumstances he secured the best possible agreement. Nor is there any doubt that, if things go right, the prospects for the future stability and prosperity of Hong Kong and that part of the world will be bright, especially with the opening up of the giant Chinese markets for the development of trade and commerce.

I shall concentrate on the international dimension, to which the hon. Member for Walthamstow (Mr. Deakins) addressed his interesting and perceptive remarks. By that I mean four things. Hong Kong is one of the key parts of the world's financial and trading system. It is one of the wealth-creating centres of the planet. It is a source of physical wealth and a range of new ideas. It is interesting that Hong Kong inspired the Foreign Secretary in a former role to develop his idea of enterprise zones, which have been introduced in the United Kingdom and now in the United States. Fourthly, it is the home of millions of free people, businesses and of tens of thousands of families, many of whom have tasted oppression in the past and clearly remember what happened in Shanghai.

So the autonomous survival of Hong Kong, without any undermining by the Communist party, is internationally vital. There is international interest in the survival of an autonomous Hong Kong. It is not merely a matter of pride, duty and interest here and in Peking, although it is also those things.

If there is an internationally vital requirement it needs two things. First, it needs a strong, internal SAR government, as many hon. Members have rightly observed. Minds will have to be made up not only on the ideas in the latest White Paper for the Legislative Council but on the Executive Council and the governorship before 1988. A decision will have to be made about whether there is to be a gubernatorial type of government with one figure in charge in 1997 or whether it is to be a government of a different sort. It will be essential for that government to develop. While the development may take time, the decisions must be made during the next two or three years. If the Peking cadres are to be kept from infiltrating the structure of government in Hong Kong, as they will naturally do, a strong government is essential.

Secondly, international interest and commitment must be secure. Some people will tell us not to worry about that, because Japanese and American capital will pour in as it is doing already. That is true, but the money will go out as fast as it has come in the moment when it is felt that the world has lost interest in the future of Hong Kong and that the special autonomous region is sinking back into the grey mass of greater China.

So we have an important task. We must ask ourselves what we can do. A number of suggestions have been made. I shall repeat some and make some new ones.

First, I like the idea of the annual report to Parliament that the right hon. Member for Leeds, East (Mr. Healey) and others have mentioned. It should be a report about the work of the joint liaison group and about internal developments. Indeed, I think that we should insist on that. My right hon. and learned Friend the Foreign Secretary should adopt that as a Government commitment and procedure.

Secondly, it must be right that there is involvement by the Hong Kong people in the joint liaison group—perhaps not immediately, but in due course. We shall need to press for that. Thirdly, the Hong Kong people must be allowed to help to draft the basic laws. I hope that my right hon. and learned Friend's optimistic assessment of that possibility is right and that that will happen, as it is essential. Most importantly, Hong Kong's autonomy as a separate region, with a separate political, trading, commercial and legal system must be underpinned internationally.

That means, in particular, two things. First, it means that the assertion made by my right hon. and learned Friend very strongly that what is written and settled is an internationally legally binding agreement must be made a living and continuing reality. Secondly, it means that there must be some means of ensuring that Hong Kong SAR passports are accepted everywhere, like the passports of any other sovereign state. There are two sides to the travel documents question. One is the issuing of them and the other is getting the international community to accept them. It is vital that SAR passports should be recognised throughout the international community.

I have mentioned a few things. The point I wish to emphasise is that it is within our power to achieve them. It is not true that all the cards remain even now in Peking's hands. In this debate I have detected signs of that dismal fallacy—a fallacy of the past that has no relevance today—that where there is no sovereignty, there is no influence. Any trade, diplomatic or financial negotiator or banker will confirm that that is not so. But the perpetuation of that fallacy has caused this country great grief and harm.

I am all for realism in recognising the future position of Hong Kong as an SAR of China, but realism must not become defeatism or disinterest. I fear that that would be the possibility if some of the views expressed in the debate were taken to their logical conclusion.

I believe that the agreement is the best that could be secured. However, this is not the time for opening champagne or for celebratory self-congratulations. If that tone has crept into the debate on some occasions, I regret it. The Chinese proverb says, Never praise a day before evening. There is much wisdom in that when we look ahead to the enormous tasks on which we are only just now embarking in dealing with the future stability, security and prosperity of Hong Kong.

We are at the beginning of a very long and arduous journey to ensure the survival and prosperity of what has so far been one of the 20th century's most glittering successes and a beacon of light amidst a world of much darkness and misery. It is essential that we keep that beacon alight.

8.33 pm

Mr. Andrew Faulds (Warley, East)

In my 10 minutes I shall not have time to make reference to the right hon. Gentleman's speech, which is the normal tradition, and nor do I intend to give way to interventions. I think that the introduction of the 10-minute rule is a nonsense, and I hope that we get rid of it.

I believe that both Governments, the British and the Chinese, and particularly their negotiating teams, deserve our warmest congratulations for having evolved an extraordinarily satisfactory agreement. And I believe that confidence—that essential component for its successful fulfilment—will be maintained by the conduct of the three parties involved in Hong Kong's future.

Concern has been expressed both here and in Hong Kong that China might not observe the agreement over the years. I strongly oppose that view—and there are very good reasons for doing so. First, historically, all Chinese Governments—whether dynastic, republican or Communist—have meticulously honoured their international agreements. Second, the process of the reunification of China will not be complete until Taiwan returns. Third, China needs to pursue the process of modernisation and will certainly not wish to damage its "open-door policy". Fourth, China needs the foreign exchange generated by Hong Kong. Finally, China may even want to learn from Hong Kong some of its dynamic commercial and trading skills.

Britain, of course, wants the agreement to work because of Britain's commercial and trading interests in Hong Kong's prosperity. But even more importantly perhaps Britain wants to tidy up the ends of empire responsibly. That she must do. What of the views of the Hong Kongers—the people most affected by the ending of the lease and the abandonment of empire? I have visited Hong Kong a number of times over the last few years, usually on the way to or from China in the company of my admirable friend, the hon. Member for Christchurch (Mr. Adley). On such visits, contacts in Hong Kong are normally pretty limited on the establishment round. But the purpose of my last visit in September—three days after the initialling of the agreement—was to elicit the reactions of the range of contacts which were set up at my specific request—and most of those were certainly not on the cocktail circuit.

Two reactions to the agreement were immediately clear from all those contacts. First was the "Chineseness" of the Chinese of Hong Kong—the feelings of attachment and affection for the land and the culture of their mother country, and that feeling seemed to override most of the adverse considerations. Second was the view stated time and again by all the groups I talked with, that the Chinese Government had met nearly all the points put to them at various meetings by Hong Kong representatives of a variety of interests. The agreement, they conceded, was much better than they had thought attainable.

But the real surprise of that last visit was the moderation and rationality of the reaction from those I thought would have responded otherwise. We Parliamentarians are great proponents and exporters of the Westminster model. But it does not always fit. And it often does not work. I had expected strident demands for the immediate introduction of direct elections to the legislative council. But it was not like that. Even the radical groups and the young intellectuals—a most impressive crowd of young men and women—were not arguing for direct elections now or tomorrow. They understand the unique and precarious position of Hong Kong. They want its prosperity to survive. In all the many conversations I had, most in the excellent company of the hon. Member for Inverness, Nairn and Lochaber (Mr. Johnston), these supposedly radical people seemed to me to accept, indeed to stress, the responsible view of "phasing in" direct elections and seemed to accept too the need for indirect elections for some period of time, although I must say that the functional constituencies were not universally popular.

What time, of course, is the crucial question. I criticised the Green Paper on Hong Kong's future while I was there, on its time scale of change. The recent revised White Paper has already brought the start of the process three years forward from the suggested 1988, to 1985. So far so good. However, I do believe that even this position is unduly pessimistic about the ability of Hong Kong people to comprehend the democratic procedures, although education in that area is mooted, and certainly needed.

The people of the territory have never had the chance or the choice of participation. I understand the argument about the Chinese tradition of respect for authority. But Hong Kong has had compulsory education for 32 years, since 1952. And Western pressures and attitudes have certainly been at play over many decades—whether always advantageous is another matter. Perhaps Hong Kong's people have more sense and more appreciation of Hong Kong's special situation than the local Government allow for. Democracy is an infectious thing, once given rein. And historical processes always move much faster than expected. I think that a somewhat quicker pace of change to fully representative government than the White Paper allows for, will have to be met in Hong Kong.

Then there are issues that remain out of the residual responsibility of empire. I am perturbed that the rights of protection and travel under the British Dependent Territories citizenship cannot be transmitted after 1997 to the first generation of Chinese Hong Kongers. I wonder if Her Majesty's Government have tried hard enough on that. Perhaps there was strong resistance from the Chinese Government to the possibility of such rights continuing and lasting beyond the 50 years of the two systems in one country. But perhaps we did not want an inflow of immigrants.

I am particularly concerned about the non-Chinese residing in Hong Kong —children of citizens of the British Dependent Territories who will become stateless after 1997 and who may number between 6,000 and 10,000. However, I understood the Foreign Secretary to give an assurance about them. Then there are the British Dependent Territory citizens living outside Hong Kong. Their numbers are difficult to estimate but a figure of 3,000 Indians, among others, has been put forward. Do we in Britain not have a responsibility to assure the future of those last categories? Have we not a duty to them on this demise of Empire? Fortunately, we will be able to pursue those matters on later legislation on nationality. But there are two further points that I must make. If and when direct elections to the legislative council are introduced—as I think that they will be before 1997—will privilege in the sense that we in this House enjoy it, of protection from prosecution, apply to members of that body?

Consideration must be given too to the abandonment of the oath of loyalty to the Queen—much as we love that admirable lady. The view has been expressed in Hong Kong that future members of the Legislative Council might not be prepared to give such an oath.

I am sorry to have had to rattle through my speech at such a ridiculous speed. I hope that the 10-minute limit will be reconsidered. However, I shall be grateful if the hon. Gentleman will make some reference to all those points.

8.42 pm

Mr. Hal Miller (Bromsgrove)

I wish to treat with the subject of change raised by the hon. Member for Warley, East (Mr. Faulds) in the context of the need to maintain the prosperity and stability of Hong Kong. Several hon. Members have spoken today of the need for a realistic approach. I trust that my own note of realism will not jar on the atmosphere of eulogy and euphoria that has largely permeated the debate so far. I have already congratulated those responsible on the achievement of the draft agreement, but we are now more concerned with its implementation.

First, there is a question of prosperity. Hong Kong must prosper if it is to continue to enjoy its present autonomy, let alone the autonomy promised by China, because a Hong Kong that is not prosperous would not merit the operation of the concept of two systems within one country. China's concern for the prosperity of Hong Kong is evident from that country's expressed worries about the budget deficits in Hong Kong and the level of welfare benefits already available, which are not paralleled on the mainland.

Hong Kong, therefore, is under an obligation to succeed. That obligation has certain positive features. There has to be a response in the development of new products and the promotion of new markets. That, coupled with the political change now set in train, will inevitably involve changes in the education system in Hong Kong which—in parenthesis—I myself think are long overdue and would have hoped to see brought forward after the 1967 riots.

Negatively, there is the pressing need for Hong Kong to be protected against the swelling tide of protectionism in the developed markets of the world. That is a matter in which Britain's role and continuing interest are most important. As a member of the EEC, we are not only an important customer but the possesser of an important voice in the international bodies which regulate trade. We must secure Hong Kong's separate and autonomous representation on those bodies. Britain must also do a great deal of detailed negotiation on behalf of Hong Kong on such matters as traffic rights for Cathay Pacific Airways until 1997.

However much some people in Hong Kong may object—and some do—to continuing British involvement, and however much others may feel let down by Britain, Britain still has a responsibility to exercise. We will continue to be responsible for defending Hong Kong's interests on the joint liaison group before the year 2000.

The second matter of importance is the stability of Hong Kong. Peking could not stand idly by and watch Hong Kong become unstable. That assumption has nothing to do with the draft agreement. It has been the case ever since 1949 that destabilisation would inevitably bring involvement. That is why the draft agreement provides for Britain to continue to administer Hong Kong until 1997, and I believe, why the British Government have declared their determination to govern until the transfer of sovereignty and administration takes place. After 1997, under the agreement, Hong Kong will still remain responsible for internal security. It is foolish to ask China whether it intends to station the PLA in Hong Kong or to introduce conscription. The Chinese are bound to say that they have every right to do so. However, there is no evidence that they wish to do so.

Hong Kong has to maintain internal security, and it will be important to maintain a strong civil service, free from political manipulation, as well as an independent judiciary. Hong Kong's commercial, financial and industrial success depends on laws that are certain and subject to independent interpretation as much as on an impartial and efficient civil service and police force.

The agreement provides for an executive to be subject to an elected legislature. The question that exercises many hon. Members is how those elections fit in with the concept of continuing British administration, the maintenance of stability and the transfer of power. On what system, furthermore, should they be based? A recent editorial in the Ming Pao paper made it plain that China had promised a high degree of autonomy but not necessarily a high degree of democracy. It is obviously important not to arouse any further the suspicions of Peking that were already a roused when the Green Paper was introduced before the negotiations on the draft agreement were completed. There is a danger that the Chinese may regard the White Paper as having been produced in an undue hurry. It is most important not to regard the elections as a test of China's sincerity about the agreement or to take them as an earnest of Britain's washing her hands of responsibility for Hong Kong. We must all understand that China would be bound to oppose the formation of a pro-Taiwan Right-wing political front. That could only have a destablising effect.

The White Paper was surely right to provide increased opportunities for training people in elections and leadership while allowing for consultation with China on the joint liaison group. We have to take China along with us and to settle Chinese suspicions, and the result is not likely to be an electoral system based on the Westminster model. As the UMELCO paper recognises, it is likely that a Hong Kong system will evolve and that Hong Kong leaders will emerge to stand up for Hong Kong's interests.

The aims of Britain, China and Hong Kong are the same—to work for a prosperous and stable Hong Kong. There will be increasing co-operation to that end, and not only on the joint liaison group for whose work the assessment office report has provided an initial agenda. People have derided the assessment office, but its report reflects views in Hong Kong, as the opinion poll commissioned by UMELCO has confirmed. In view of the attack made on UMELCO, I should like to pay tribute to it as its poll has been found to reflect all sectors of opinion in Hong Kong. Some tribute should be paid to the care and trouble that it has taken to elaborate it and for the excellence of its memorandum.

Chapter 4 of the report draws attention to the items that Hong Kong people want to be dealt with on the joint liaison group. Most notable among them are the drafting of the basic law and the possible conflict between the laws of Hong Kong and that basic law. That issue is still a source of much anxiety and must be resolved. They also want the joint liaison group to deal with the appointment of the chief executive and future nationality. However much some people in Hong Kong might feel aggrieved, especially the young ones who are angry that their future has been decided by Britain and China in this way, and however much older people might feel bitter about the consequences of the British Nationality Act 1981, Britain has to remain responsible until 1997. If Britain gave up that responsibility, China would assume it—a vacuum could not exist.

The success of the two systems in the 50 years after 1997 depends on the success of the 12 years remaining until that date. Of course Hong Kong people are worried about changes in China—they always have been. It has never been possible to see more than five years ahead in Hong Kong. The draft agreement merely preserves that. The task in the next 12 years is to knit Britain, China and Hong Kong together ever more closely through the joint liaison group and through practical projects of cooperation such as the nuclear power plant, the telecommunications project, the Canton motorway, the second harbour crossing and so on. Hong Kong has an important role to play in the development of China and as an example to Taiwan of two systems in one country. However, its ultimate success will depend on the confidence that its people show in their own future and the efforts that they make to secure their own prosperity and stability.

8.51 pm

Mr. Dennis Canavan (Falkirk, West)

I welcome the draft agreement in principle. It marks the beginning of the end of a long era of British colonial rule which dates back to the opium wars of the last century when Britain grabbed Hong Kong from China by an act of imperialist aggression and trickery. As far as we can gather, the draft agreement is generally welcomed by the people of Hong Kong. I say "as far as we can gather" because the method of assessment of opinions in Hong Kong is imperfect. By saying that, I am not making a personal attack on those involved in the assessment office. They had a difficult job and it was made more difficult by the fact that there is no representative government or assembly in Hong Kong. Indeed, there are no elected representatives in Hong Kong with any meaningful power and this is a point to which I shall return later.

Despite the general welcome of the agreement, some Hong Kong people have some reservations and fears. Those fears and reservations include the role of the people's liberation army, the possibility of conscription, nationality rights, passport rights, human rights and personal freedoms, freedom of religious practice, the desire to participate in the work of the joint liaison group and the desire to participate in the formulation of the basic law. There is also a general fear about undue interference by Peking. The best way in which to alleviate those fears and reservations and the best guarantee of preserving all that is worth preserving in the Hong Kong way of life is to maximise the autonomy of the people of Hong Kong. Complete independence is not an option—it never was. Sovereignty will ultimately be transferred to the People's Republic of China but even without complete independence there could be a high degree of self-determination. That would involve a high degree of internal democracy replacing the existing system of colonial patronage.

Last month, the Hong Kong Government published a White Paper to which several right hon. Members, including the right hon. Member for Old Bexley and Sidcup (Mr. Heath) have referred. I do not often agree with him, but I entirely agree with what he says about the White Paper. It is too little and too late. It proposes that, next year, an elected element will be introduced to the Legislative Council. It is worth reminding the House that, despite the introduction of that elected element, not one member of the Legislative Council will be elected directly on a universal franchise. Less than 50 per cent. of the Legislative Council in 1985 will be elected by any method. The functional constituencies which are proposed are unnecessarily divisive—they might reinforce existing or potential divisions in society. Moreover, the White Paper contains no proposals for elections, direct or indirect, to the Executive Council in 1985.

I understand what right hon. and hon. Members have said about it not being desirable suddenly to introduce tomorrow or next week a mini-Westminster model of democracy in another part of the world with a different culture, a different way of life and different traditions and call it the ideal model of democracy. There must be a phasing-in programme. Some of the pressure groups that I met during my recent visit to Hong Kong made that point strongly. However, it would surely not be unreasonable to suggest the target that by, say, 1990, the entire Legislative Council should be directly elected on a universal franchise, that the Executive Council, or whatever body replaces it, should be elected indirectly from the members of the Legislative Council and that the head of that council—the governor, chief executive or whatever he is called—should also be elected from the membership of the Legislative Council. The White Paper's proposals are far too pussy-footed, and one of the reasons for the go-slow attitude is that—I was sorry to hear this view expressed in the House as many people regard it, rightly or wrongly, as the mother of democracy—some people think that democracy is not bad as long as there is not too much of it and it is possible to predict who will win the elections. Some people seem to be afraid that those who win the elections may be a bit too radical or Left-wing and that perhaps the odd nasty Socialist may get elected to the Legislative Council. If people genuinely believe in democracy through direct elections they should not be two-faced. Adopting double standards and saying that democracy is all right so long as we win is hypocrisy rather than democracy.

I would not say that the Chinese version of Socialism is perfect, but it manages to feed the billion people of China. Anyone who imagines that the naked unbridled capitalist economy of Hong Kong could be transplanted to the People's Republic of China and continue to feed all those people is living in cloud-cuckoo-land. Although the draft agreement provides that for half a century after 1997 there will be guaranteed co-existence for a capitalist system alongside the Socialist system, no realistic politician, on whatever side of the ideological divide, could expect such co-existence to continue for ever. There will have to be some kind of accommodation between the two systems.

The Hong Kong economy was largely built on the hard work and endeavour of its people. Unfortunately, this was sometimes accompanied by the exploitation of cheap sweated labour by multinational capital. That exploitation will not and should not survive and I hope that it disappears long before 1997. That is why, despite the provisions of the draft agreement, there will eventually have to be some accommodation between the two systems so that eventually all the people of the reunified China can live together in peace, equality and dignity, with respect for one another's human rights and a higher degree of social justice for all.

9 pm

Mr. Robert Adley (Christchurch)

I am fortunate that you, Mr. Speaker, have returned to the Chair and called me as the clock shows 9 pm when we escape the appalling penance of the 10-minute limit. You will correct me if I am wrong, Mr. Speaker, but I understand that that is the position. It is a great tribute to your judgment that you have called me at this time.

Mr. Speaker

Order. The hon. Gentleman tempts me. There is no longer a 10-minute limit on speeches, but quite a number of other hon. Members wish to take part in the debate.

Mr. Adley

Thank you, Mr. Speaker. I have asked my hon. Friend the Member for Orpington (Mr. Stanbrook) to give me a swift dig in the ribs when I reach nine minutes.

I hope that those who observe our affairs will not take the thinness of attendance at this debate as in any way suggesting any lack of interest in the future of Hong Kong. I believe that more of us have spent more time genuinely worrying about whether we can get this matter right than any other single issue for many years. Members in all parts of the House are deeply aware of our responsibility to try to ensure that the people of Hong Kong have the future that they want.

I shall not take up time repeating the tributes to which my right hon. and learned Friend the Foreign Secretary and his colleagues are so clearly entitled. As he rightly said, we must remember the deep roots of history underlying the Hong Kong situation. We know the political reality, but the practical reality is also legion.

Only 3 per cent. of Hong Kong's fresh water supply can be obtained from the present territory of Hong Kong island, Kowloon and Stonecutters. When we talk about what the Chinese have done in the past and might do in the future, we should remember that they could at any time have turned off the water supply and taken over. The best guarantee that the people of Hong Kong have as to the likely behaviour of the Government of the People's Republic in the future is the reality of their behaviour since 1949.

My right hon. Friend the Member for Guildford (Mr. Howell) suggested that sovereignty was not the key issue. However, it always was for the Government of the People's Republic of China. It is no use our suggesting that it was not, or is not, an important issue for them. Although they could have taken over Hong Kong any time they wanted to, the negotiated return of Hong Kong to mother China is and always was the key emotive issue for them. More than two years ago, the previous Chinese ambassador said to me that until sovereignty was conceded nothing would be possible, but once sovereignty was conceded everything would be possible. As a result of that, I was perhaps slighty less surprised than some hon. Members at the progress that we have been able to make since we conceded sovereignty.

Two points require our attention. One is the pace of change. Those who hold power in Hong Kong now like it, and want to hold on to it. They have not been elected to it and have an obvious incentive to resist change. The idea of an annual debate is acceptable, but it is a peripheral issue and to suggest that it is the overriding priority emerging from the debate is indicative only of the priorities of those who have put the idea forward as though it is the most important thing in the world.

Those who have power in Hong Kong at the moment were appointed by the governor, who was appointed by Her Majesty's Government. They have always looked to London as the ultimate source of their patronage, and they want to continue to look to this place as the source of influence for Hong Kong. However, it is in Hong Kong itself that the changes must take place. Therefore, we should be encouraging change in Hong Kong: not change for change's sake but because it is vital that the people of Hong Kong should equip themselves with their own political institutions long before 1997.

I have never been a sycophantic supporter of UMELCO, so all that I have to say about it is to quote a sentence in a leading article in the Hong Kong Standard on 11 May which said: For a self-proclaimed mirror of Hongkong opinions, Umelco seems to reflect not so much the daily concerns of the Hongkong public but the obsessions of the few. By quoting that, I am suggesting to my hon. Friend the Minister of State, Foreign and Commonwealth Office, and the Government that we must broaden our listening as we go into the next 12 years. We simply cannot allow a handful of people who are appointed by the governor to be taken as solely, or even mainly, representative of the genuine voice of Hong Kong. That is why I agree with the point that my right hon. Friend the Member for Old Bexley and Sidcup (Mr. Heath) made, particularly about the young people in Hong Kong.

Most hon. Members have spoken of citizenship. We must not forget that there are between 3,000 and 4,000 people in the Indian community, many of whom held British Indian passports before India achieved its independence in 1947. The Government must pay particular attention to that group.

My second point is about Chinese intentions. I believe that the Government of the People's Republic of China intend to observe both the spirit and the letter of the agreement, but they are looking for advice and guidance on the best way to achieve this objective. They wish to encourage change, provided it is change that aids in the maintenance of stability in Hong Kong. If I were to be so presumptuous as to give the Government of the People's Republic of China some advice, it would be to involve the people of Hong Kong in the creation and development of their own institutions. A motto of "Invite, involve and entrust" would be a good way for the Chinese Government to ensure stability in Hong Kong by keeping the people content and confident in their own future. I agree with those who have said that the people of Hong Kong should be involved in the drafting of their basic laws. After all, they themselves will have to live under the laws.

One of the Government's main duties must be to encourage change and to keep an eye on those who want to stifle it. I do not share the concerns about the sincerity of the Chinese Government expressed by my right hon. Friend the Member for Guildford. If he is concerned about the sincerity of the Chinese Government's intentions, then surely he will agree that the best way to keep a check on that sincerity is to ensure that the people of Hong Kong are equipped with democratically elected institutions at an early date. The development of such institutions by Hong Kong people will make it far more difficult for the Chinese Government to interfere.

Numerous concerns are expressed daily by the people of Hong Kong, but in many ways it is extraordinarily interesting that we have 12 years to iron out the outstanding problems. One could only wish for the same thing for industrial disputes. The timing between events being discussed and action being taken causes trouble, and the shorter the time, the more the trouble. These 12 years are precious years and they are more than enough time to deal in detail and at reasonable length with the many problems that understandably concern the people of Hong Kong.

It is interesting that the agreement has been objected to by only two groups. One group is the Taiwan regime and the other is the Government of the Soviet Union. That speaks for itself. There is nothing that the Taiwan regime fears more than the ability of the Government of the People's Republic peacefully and quietly to conclude an agreement with Her Majesty's Government which is acceptable to the people of Hong Kong, which is implemented without too many problems and which shows the Taiwan people, especially the young, that the scare stories which are constantly being spread by Taiwan and its agents in Hong Kong about the intentions of the Government of the People's Republic are unjustified. I am more than happy to commend the agreement to the House.

The best guarantee for the future would be a broadly based and legitimately enfranchised representative body. I hope that the Government will listen not only to those who are appointed by the British Government but to a far broader base of people in Hong Kong. I wish the millions of citizens of Hong Kong the very best for the future. We shall be keeping more than an eye on them because we are responsible for their welfare for at least 12 years. The question is not whether the House will monitor what is going on. The Chinese do not want to take over Hong Kong and they do not want the British to relinquish control before 1997. We shall indeed be keeping a close eye on things, and we wish Hong Kong well.

9.12 pm

Mr. Tom Clarke (Monklands, West)

The hon. Member for Christchurch (Mr. Adley) made a crucial point when he referred to the views of the Chinese towards the Soviet Union and on the likely attitude of the Soviet Union towards the agreement. The debate has been interesting and realistic. It has reflected the views of the House as expressed in the various debates that took place during the negotiations. It was accepted that the agreement would be immensely difficult and complicated and I would be churlish—I do not intend to be so—not to acknowledge that the agreement was hard fought and entailed close examination of the small print. In common with all those who have contributed to the debate, I welcome the agreement. However, no one should be complacent while we study these matters over the next few months and on into the coming years.

I agree with those who have suggested that we shall be hearing about these matters for a long time to come. The leader in yesterday's edition of The Times made an important point, although I did not agree with the leader entirely. It offered the opinion that Both the full Commons and its Select Committee on Foreign Affairs must meanwhile keep closely in touch with the colony's fears and aspirations and the Government should be generous in allocating parliamentary time. That is important, but equally important is the reference to "fears and aspirations". I happen to believe that the greater of the two is aspirations. The agreement offers a great deal of hope to the people of Hong Kong and to others well beyond its borders. I say that in the spirit in which comments have been made by many of my hon. Friends. We would not have devised the system of government that we have seen in Hong Kong in recent times if we had not believed in democracy, and we believe that a strong case should be made for improving democratic processes in Hong Kong. Having said that, I believe that the people of Hong Kong are beginning to indicate that they, too, take that view. I visited Hong Kong in March with my hon. Friend the Member for Hamilton (Mr. Robertson). We were impressed by the educational system and by community involvement, as we saw it. The young people whom we saw taking part in those activities, and in industry and in the public service in Hong Kong are the very kind of people who, notwithstanding the agreement, will say that they want to have a role in shaping their society. In my view, they are absolutely right.

I believe that the agreement is important. We recognise the importance of Hong Kong in trading matters. We also recognise that importance in the context of our relationship with China and the wider world. I was interested to read among the views expressed in the consultative document an assessment of the reaction to the agreement by the Hong Kong Federation of Education Workers. It is to be found on page 23: The solution of the Hong Kong issue under the innovative guidance of the 'one country, two systems' concept will be conducive to maintaining the stability and prosperity of Hong Kong. Moreover, the success of this 'one country, two systems' arrangement may embody a more far-reaching international significance. I believe that to be right. I believe that the agreement, and the events which will follow, can have a very profound international significance. As my hon. Friend the Member for Hamilton is aware, because we visited the region, China has in Shenzhen an economic shop window which suggests that it is very much in the interests of China that Hong Kong should be seen to be prosperous and successful.

In view of the international impact of the agreement, it is right that the House should consider carefully its meaning in that context and beyond. In previous debates and discussions, hon. Members, including myself, referred to the refugee problem. Today the Secretary of State for Foreign Affairs repeated a view which he has twice expressed in the Chamber on the matter. He has said, broadly, that the refugee problem has nothing to do with the agreement; it ought to be left on one side and should be dealt with at another time. I happen to believe that it has everything to do with the agreement. The fact that refugees are living in those conditions and in that society is an affront to everybody who is involved in the discussions. I should have liked to hear a great deal more from our friends in Hong Kong about an attempt to seek a solution to the Vietnamese refugee problem.

I should like to refer to other views which were expressed in the document dealing with the assessment. On page 41 we are told that a group of individuals has said: We do not care what happens to Hong Kong for our sake. However, we worry for our children". That is an admirable expression of an opinion which people understandably hold. I am sure that all hon. Members wish those who express such a view success in the objectives that they have set. Nevertheless, I believe that even the children of those people do not want the refugee camps to be continued but an international agreement to be arrived at. Notwithstanding the views which the Foreign Secretary has expressed previously on this matter, I believe that it would help us considerably if a new British initiative were taken. I am sure that hon. Members would encourage the Foreign Secretary to take that view.

Mr. Faulds

My hon. Friend has the luxury of being able to allow interventions which those of us unfortunate enough to speak between 7 pm and 9 pm were unable to do. Does he agree that the efforts that the Hong Kong authorities have put into taking care of the refugees are extraordinarily concerned and they have done a good job but that it is totally unreasonable to expect them to bear that burden on their own? It is essential that not only should the international community accept obligations in that area but that the British Government should be far less mean-minded in future in their attack on the problem.

Mr. Clarke

Yes, I am delighted to agree with my hon. Friend. When my hon. Friend the Member for Hamilton and I visited one of those camps, we were full of admiration for the work being done. Nevertheless, we noted that the camp was next door to a prison which we had to go through in order to see the refugees. Excellent work is going on, but I entirely agree that the Government should apply themselves to trying to seek a permanent solution to that difficult problem.

During future debates—I have no doubt that there will be debates on the Bill which the Foreign Secretary mentioned in his opening remarks—there will be further discussions about nationality because grey areas remain. There will be discussion about land ownership, defence and, above all, human rights. As those discussions continue, the relationship that has been developed between Britain, the people of Hong Kong and the Government and people of China can be improved, good though many of us believe those relations to be.

The Foreign Secretary said that the Chinese contribution to the discussions represented vision and realism. The very fact that he said that at this difficult time in international affairs will be welcome. I take the view, which I believe is shared by many of my hon. Friends, that the agreement is well worth while. But it ought to be seen not as the end of the story but as the beginning of what could be a new era of hope for the people of Hong Kong in terms of their attitudes to social democracy and so on, and, perhaps even more importantly, to the realisation of world peace. In the negotiations that have taken place we have set an example to the rest of the world which others might be encouraged to follow.

9.22 pm

Mr. Michael Marshall (Arundel)

I am glad to follow the speech of the hon. Member for Monklands, West (Mr. Clarke) because I found a great deal with which I could agree. May I at the outset declare my interest as a parliamentary adviser to Cable and Wireless. I do that in the particular context of Hong Kong because, as many hon. Members will know, Hong Kong's raison d'être as a financial and communications centre is a key element in the future not only of Hong Kong but of the People's Republic of China.

It was in that sense that I found myself in agreement with my right hon. Friend the Member for Old Bexley and Sidcup (Mr. Heath) when he talked about the competition between Singapore and Hong Kong. Therefore, if the House will allow me, I want to deal a little further with the experience of Cable and Wireless in Hong Kong and in the People's Republic of China. Its experience in the past and plans for the future, and above all the commitment which it has made to that triangular relationship, is of some significance.

It is fair to remind the House that the commitment which companies such as Cable and Wireless have made in Hong Kong, which goes back many years and involves many hundreds of millions of pounds of investment, has presently assured Hong Kong its standing as the leading communications centre in the far east. When we ally to that the joint ventures which have been agreed with the People's Republic of China, the implications become of extreme importance.

A co-operative agreement has been made for a microwave link between Guandong province and Hong Kong. That opens up communications with south China and connects with the Hong Kong-Guengzhou communications system. There is a telecommunications service agreement for exploration work in the south China sea. That is done through the Huaying Nanhai joint company. If energy resources are found in that part of the world, it will have a strong effect on the industrial development of China and Hong Kong and that will be important for companies such as Cable and Wireless and BP, which is directly concerned.

The agreement for a joint venture to provide a telephone service for the Shenzhen special economic zone is indicative of the way in which a British company operating in Hong Kong can provide the infrastructure for much of the new development on which the People's Republic of China depends.

China is to be commended on the way in which a cordon sanitaire has been introduced through the economic zones to allow an integration and interface between the two systems operated by Hong Kong and the PRC using the economic zones as a buffer. It is in Britain's interests as well as Hong Kong's interests to ensure that the economic zones are a success. A number of Hong Kong Chinese industrialists are already investing in the zones, and further afield in Shanghai. That is wise.

I support what my right hon. Friend the Member for Old Bexley and Sidcup (Mr. Heath) said about investment. The British share of investment and trade in Hong Kong has declined rapidly. American and Japanese investment has increased substantially, as has that from other European countries. Like many other hon. Members I visited Hong Kong recently. I am grateful to the Hong Kong Government for all that they did to enable us to see what 'was going on. However, I was depressed that already substantial numbers of Japanese and American companies are active on the ground and considering how they can establish manufacturing facilities in Hong Kong with a view to trading from Hong Kong with the People's Republic of China and moving progressively into the economic zones and hence into a wider Chinese context.

I urge British industrialists who are looking for future markets to think carefully about the opening up of China through Hong Kong. Some of us have been involved in that part of the world for 20 years. We know that it is a long haul. It took about 10 years for Cable and Wireless to conclude some of its early agreements. But agreements which the People's Republic have made since 1949 in trade and industry have been honoured. The record is good.

I urge British and Hong Kong companies to look to China for a strengthening of the link that already exists. That is in their interests. The greatest underwriting for the future lies in that investment for Hong Kong, Britain and China.

I have made those points by way of preamble. I also want to discuss some of the wider questions that have come from the agreement. However, industrial matters are of a wider significance than was perhaps appreciated until the agreement was signed. We now see the opportunities opening up. The examples that I have cited reflect farsighted vision in the past.

I am sympathetic to the whole question of Hong Kong passport holders. I should like to put one or two thoughts to my hon. Friend the Minister in the hope that he will convey my suggestions which I make as a contribution to further discussion. This is a complex matter. I do not pretend that what I am about to propose can be assumed automatically to be appropriate. I should like my proposals to be tested.

As a number of hon. Members have said, there is a wide range of existing passport holders in Hong Kong, and that raises serious problems. Already there are some problems for the so-called British dependent territories passport holders. There is plenty of evidence, from conversations that I and others have had, that those who come into this country with such passports experience difficulty, even as regular travellers, in making their way through customs and immigration. From time to time, there are particular problems with delays, investigations and so on.

It would be helpful to have a visa stamp in the passports emanating from Hong Kong that are used by regular travellers. Those regular travellers who can establish—I believe they can do this easily—a bona fide reason for their regular travel patterns should have their passports stamped with a visa. That would follow the American path whereby, after the initial visa is stamped, the passport holder can, in due time, move into a higher category of unlimited access. The British dependent territories passport allows that system, but I believe that my principle would help in two ways. First, the visa stamp system would facilitate the movement of regular travellers with a bona fide reason for travel. We could reasonably put it to the customs and immigration authorities that the movement of those travellers should be facilitated. Trade and investment and the links between Hong Kong, Britain and China would be facilitated if the passage of travellers were eased in that way.

Secondly—I hope that my suggestion has a wider significance and provides additional reassurance to Hong Kong residents—it would follow that, when the passport expired, the visa stamp would be transferred from passport to passport. After 1997, the authorities in the People's Republic of China could be reasonably expected to honour such a visa stamp. People are genuinely worried about the future of their passport after 1997. I believe that the use of a visa stamp would help to alleviate the difficulties. Having moved in that direction, I should expect the Government to look to the Commonwealth countries and members of the Community to follow suit. The assurances about access and, therefore, freedom of travel might prove helpful in the short term and, above all, in the longer term.

I do not agree entirely with my hon. Friend the Member for Christchurch (Mr. Adley), although he made a good speech. He brushed aside the importance of accountability to the House. I support the right hon. Member for Leeds, East (Mr. Healey) in putting forward a proposal, which I advanced in Hong Kong, for an annual debate in the House. I suggest that a convenient time to hold that debate would be during the annual foreign affairs debate. I believe that there should be a printed report on the work of the joint liaison group. It is true that the assessment office has provided us with a worthwhile agenda. but the provision of an annual report would help us to focus our debates. We may not want to debate this issue in every foreign affairs debate, but over the next few years such a debate would provide us with a check list on which we could work. It is important for the House to be seen to commit itself to that process of continuing observation and comment. In considering the work of the joint liaison group, there may also be opportunities for us, through the Select Committee system, to make a positive contribution. I accept that a great deal remains to be done.

With regard to the question of a wider franchise, I am somewhat reluctant automatically to argue that the Westminster model should be transplanted to Hong Kong. I believe that progress in that direction should be left essentially in the hands of those whose future lies in Hong Kong. In saying that, I am not overlooking the fact that there are probably many people in Britain who can make a contribution. This House and Her Majesty's Government have a continuing responsibility. I hope that a genuine feeling for democracy will be nurtured within Hong Kong on a basis that is acceptable to the people there as they face the realities of their future relationship with the People's Republic of China.

When I argue that we should continue to look at the role of Hong Kong—and the relationship of Hong Kong not only with Britain but with China—I do so because I strongly believe that in this House there are many friends of Hong Kong. Many of us have had great opportunities to be involved in trade and industry there. We have made many friends and have come to admire the tremendous success story that Hong Kong embodies.

The partnership between essentially Chinese people and British people has had many things to commend it. Despite my earlier strictures about the levels of British trade and investment, there are still outstanding examples of that partnership. In its own way, it has drawn on the peculiar skills and character of the two peoples. I hope that it may long continue, and that this House will play its part in ensuring that it does.

9.37 pm

Dr. John Marek (Wrexham)

I regard the debate as one of the most important in this Session of Parliament. I think that it is as important as any other debate that may arise from the Queen's Speech.

I regard the economic development of Hong Kong, its stability and its future prosperity as of the first priority. I agree with the hon. Member for Arundel (Mr. Marshall) that we should seek to arrange the affairs of Hong Kong with the help of the people of Hong Kong—I shall develop that theme later—so that not only do they prosper but there are economic ties with the adjoining parts of the Chinese mainland.

I should like to refer to two points on which I think there has been a certain amount of fudging. The first is whether the part of Hong Kong that was ceded in perpetuity is viable. Everyone says that it is not viable. I also think that it is not viable. It is not viable because, as the hon. Member for Christchurch (Mr. Adley) said, the Chinese could turn off the water taps. It might prove to be very difficult if the water taps were turned off. However, any part of the globe can be viable if other nations have the will to support it.

The Falkland Islands is not a very viable colony. However, it seems to be of strategic value and there may be wealth from the sea and from Antarctica, so we are prepared to spend hundreds of millions of pounds in ensuring its viability.

I remind the House that there is a place in a somewhat similar position to Hong Kong—the city of West Berlin. It is an island surrounded by a political system completely different from its own, yet it is viable. It thrives and its people are satisfied.

I am not advocating that we should take an opposite view to that of the White Paper and that we should stick out for the continued independence of that part of Hong Kong. That would be extremely difficult, but more important, I do not believe that we should do so because the original treaty was unequal. It was forced on the then Chinese Government, and I agree with the People's Republic of China that it was unequal. The People's Republic would have every right, if it wished, to insist on gaining sovereignty.

How do we equate that undisputed right with the right of the people of Hong Kong to self-determination? That does not necessarily mean independence, or becoming part of China or part of the United Kingdom. My definition of self-determination is that we should accede to the wishes of the people. How therefore, do we equate China's natural desire to regain the sovereignty of Hong Kong with acceding to the wishes of the people of Hong Kong?

There is no guarantee that that can be done, but I have every confidence that the People's Republic will act with integrity. If the people of Hong Kong wish to proceed along the lines of the White Paper, I have every confidence that the principle of self-determination for the people of Hong Kong will be satisfied.

I give credit to the People's Republic and to the Foreign Secretary for taking this first giant step—there is still a long way to go—along the road to satisfying the principles to which I have referred. Clearly, anxiety and apprehension will increase as we get nearer to 1997. There is no way in which that can be avoided. We must therefore do everything in our power to ensure that there is continued stability in the colony.

There is no guarantee about what will happen after 1997. This House should order its arrangements so that it does its best for the colony up to that time. After that, there is nothing that we can do. We live in a world of nation states where sovereignty is sacrosanct, and we must realise that. It is, I believe, appreciated that when we hand over the welfare and future prosperity of the people of Hong Kong it will become the responsibility of the People's Republic of China.

How can we be satisfied that the people of Hong Kong agree with the White Paper? I am not completely satisfied that the assessment office has done enough. I admit that it tried to do this work independently and that it has genuinely sought to obtain the views of different bodies, institutions and people in Hong Kong. It received a few thousand replies, generally from people who are articulate. Unlike almost every other hon. Member who has spoken, I have not been to Hong Kong, but I know that arrangements were made to take down any views which were given to the assessment office if the person concerned did not wish to write them down.

There is no substitute for democracy, and that means one person, one vote. Until there is a democratic declaration by the people of Hong Kong that they wish to go along the road of the White Paper, I cannot be completely satisfied—it does not matter how elaborate the assessment has been—that this is their genuine wish. Some Conservative Members, excluding those who made the last few speeches, implied that democracy is all right for the United Kingdom but is alien to Hong Kong and China. I find that elitist attitude objectionable. I am certainly not advocating adversarial politics, politics based on the Westminster model or on any of the other western European models. Democracy means that on an issue as important as this one can go to a polling station and cast a secret ballot to say yes or no to a proposal. I need hardly remind Conservative Members that they advocate ballots for certain matters pertaining to trade unions from time to time. People are people whether they live in this country, Hong Kong or elsewhere.

It is important that the White Paper is understood by the people of Hong Kong. They must take time to reflect on it and come to a decision. The right hon. Member for South Down (Mr. Powell) is muttering the question, "What happens if they say no?" I have every confidence—

Mr. J. Enoch Powell

What happens if they say yes?

Dr. Marek

If the right hon. Member wishes to intervene, he may do so, but I shall take issue with him.

Regardless of what other hon. Members think, democracy is an absolute prerequisite for the development and determination of any peoples in any country. The people of Hong Kong should be able to vote on the proposed treaty.

I am confident that people who are sensible, everywhere on the planet, will realise the position and history of Hong Kong, and will say yes. If Conservative Members are not happy about that they are performing a charade because they are congratulating themselves on a wonderful treaty and saying that it is good for the people of Hong Kong. I notice Conservative Members smiling. If that is their attitude they are being dishonest. They should be honest, and put the treaty to the test via a referendum.

Mr. Deakins

Does my hon. Friend agree that even the British people do not have the right to pronounce on the treaty or the subject of tonight's debate, because treaties are under the royal prerogative? We are being asked to approve the Government's intention to sign the treaty, but not the treaty itself, but the British people, although we are a democratic nation, are not being asked to approve the treaty.

Dr. Marek

There are shortcomings everywhere. In a recent debate the Secretary of State for Education and Science made a memorable phrase when he said that indirectly elected bodies are nearer to the democratic end of the spectrum. That caused a great deal of laughter, but it is true. A representative democracy is never perfect. Our problem is to get a representative system of democracy as near to perfection as possible. Simply having an assessment office is not good enough. I suggest that we can get nearer to true democracy by having a referendum on the White Paper and how Hong Kong people envisage their future Government.

I take up the pleas of other hon. Members who have said that there must be progress to some sort of directly elected body, whether the Executive Council or the Legislative Council, or another. The hon. Member for Christchurch (Mr. Adley) put it well in his speech when he said that we should involve the people of Hong Kong in the development of their institutions. Other hon. Members said that we should make haste to do so. I do not disagree with that. We have time. It is only 1984 and we have until 1997.

But it is of the utmost importance that we make some sort of progress during that period, so that by 1997 we have a directly elected representational Government or an advisory Government. At this stage, I am not too concerned to spell out exactly which way things should go. That largely depends on the people of Hong Kong and how they see their institutions developing. But it is vital that we should have some form of directly elected democracy in Hong Kong. That is our duty and we should not fudge it. We should not say that Hong Kong and China have never had any democracy and so they should not have any now, because whose fault is that? We should not fudge the issue.

I reiterate that I am satisfied with the White Paper. But I look to the Government to take the people of Hong Kong into their confidence in their future actions.

9.50 pm

Mr. Ivor Stanbrook (Orpington)

I shall concentrate on two matters: the position of members of Her Majesty's Overseas Civil Service now in Hong Kong, and the question of nationality.

On the first issue, Hong Kong is a British colony like any other. Its transition from that status to that of a part of a foreign state involves the same problems for its Government servants as would its transition to full independence. Its colonial status comes to an end on 30 June 1997 and those members of Her Majesty's Overseas Civil Service who have been recruited by the Secretary of State outside Hong Kong, but who are then serving there, will be faced with such changes of employer and conditions of service that they will be entitled—as would members of Her Majesty's Overseas Civil Service elsewhere—to leave their jobs on accrued pensions plus lump sum compensation for loss of office. At least, that is what I hope will happen.

I must declare an interest in that I retired from the Colonial Service, now called Her Majesty's Overseas Civil Service, in 1960, with lump sum compensation and a pension which I still enjoy, thanks to the generosity of the Nigerian Government. To their credit, they paid only recently the final instalment of the capital sum needed in order to pay the pensions of all their former expatriate staff.

The question is whether the expatriate staff of Hong Kong will be equally fortunate. My right hon. and learned Friend the Foreign Secretary has not said so specifically. When I intervened in his speech and asked for an undertaking that expatriate staff now serving in Hong Kong would be treated no less favourably than were expatriate staff so situated in colonies that have already achieved their independence, he used a form of words to be found in the White Paper but did not specifically give me that assurance. I hope that my hon. Friend the Minister will give that assurance tonight, because I respectfully submit that it is simply not possible to say that British expatriate staff now serving in Government posts in Hong Kong will be treated any less generously than were the British expatriate staff of other colonies that have received independence.

In all previous cases there has been a public officers' agreement with the successor Government, guaranteeing expatriate staff certain rights. First, serving officers who continue to serve the successor Government remain eligible for transfer or promotion elsewhere in the Overseas Civil Service. Secondly, the successor Government agree not to unreasonably withhold consent from any officer wishing to accept a transfer or promotion, and agree to preserve his pension rights on transfer. Thirdly, pensions derived from service after independence—in this case, after 1997—attract supplementary pensions for overseas service, payable by the successor Government. Fourthly, in the event of premature retirement casued by constitutional changes, the officers concerned receive lump sum compensation from the Government.

Those pledges were designed elsewhere to reassure expatriate civil servants in the colony concerned and to encourage them to remain in the service of the colony after independence, if they were required.

I should like an assurance that the Government intend to apply a public officers' agreement to the officers of the Hong Kong Government service. That is very important because, in the case of Hong Kong, the relevant agreement is with a foreign Government—one that is actually in being, rather than one that is being offered independence on terms—and, furthermore, a foreign Government that has no financial responsibility for the implementation of the agreement.

If China will not pay for the pensions and redundancy terms of Hong Kong expatriate staff, I should like to know who will pay. It may be said that the Hong Kong special administrative region will pay. The officers concerned should be told without delay so that they can make their own decisions about their future careers.

According to part IV of annex I of the draft agreement, expatriates will be employed only in their individual capacities". They will not be entitled to "privileged treatment" which I take to mean treatment special to expatriate staff, such as expatriate allowances or overseas leave with passages paid. The agreement also specifically states tat, after 1997, heads of major government departments"— and in some cases deputy heads—will be changed. Those posts will not be held by expatriates.

Those changes are not unreasonable, but they will fundamentally affect the conditions of service of the officers concerned. Clearly they will justify the early application of a public officers' agreement, such as we have had in the case of all former colonies, to all expatriate staff in Hong Kong.

It is not good enough to say that this discussion is premature because the event will not take place for more than 12 years. The whole point of the arrangement is to reassure existing staff, all of whom hold positions of great responsibility in the colony and carry on its government at senior levels, about their future. It is very important that the Government should make the position clear. I therefore trust that very shortly, if not this evening, the Government will give an undertaking to all expatriate staff serving in Hong Kong that they will be treated in this respect not less favourably than expatriate staff in other colonies have been treated on independence. I trust that the application of these arrangements will be made now and that the effective date of the public officers' agreement providing for pensions to be payable in Britain in sterling at a fixed rate of exchange will be from the date of the agreement with China as is normally the case with independence agreements.

It being half past Ten o'clock, the debate stood adjourned.

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