Hong Kong: Joint Declaration

HL Deb 10 June 1988 vol 497 cc1608-54

11.12 a.m.

Lord Cledwyn of Penrhos rose to call attention to recent developments in Hong Kong relating to the implementation of the joint declaration; and to move for Papers.

The noble Lord said: My Lords, I beg to move the Motion standing in my name on the Order Paper. Over the years this House has taken a close interest in the affairs of Hong Kong. That is due in part to the experience and knowledge of Hong Kong of several noble Lords, many of whom are listed to speak in the debate. The interest was intensified by the joint declaration and by subsequent events. We have known from the start that the Basic Law would be the single most important factor following the transfer of power in 1997 and that more than anything else, it would reflect the will and attitude of the Chinese Government. It will be the constitutional instrument by which China will govern Hong Kong.

Therefore, it is nautral that the people of Hong Kong should scrutinise the draft Basic Law in a mood of both hope and apprehension. The first draft of this crucial document was published on 28th April and consultation upon it will go on until September next. A second draft will be published next year and the final version will be put to the Chinese National People's Congress in 1990. Legally, the formulation of the Basic Law is a matter for the Chinese Government. They have the last word. Neither the Government of Hong Kong nor of Britain have any rights regarding this drafting. However, in practice there is an acceptance that it should comply with the words and spirit of the joint declaration.

The Basic Law drafting committee of 59 members chosen by the Chinese Government includes 23 members from Hong Kong. The Basic Law consultative committee, whose duty is to evaluate the draft on behalf of the people of Hong Kong, has 180 members, mostly from Hong Kong and representative of a wide range of interests in the colony. A Hong Kong view is therefore very much in evidence and if there is no reason at this moment for euphoria, there is also no reason for undiluted pessimism. I believe that it is important to note that Chinese spokesmen have expressed the hope that the people of Hong Kong will comment freely on the draft and that the Chinese Government will readily take those comments into account. That should surely be taken seriously and taken advantage of and we should welcome the Chinese Government's readiness to listen to those two major committees.

Finally, there is no reason why the British Government, as a signatory to the declaration, should not, if necessary, make representations on any important aspect of the Basic Law to the Chinese Government. The right honourable and learned gentleman the Foreign Secretary, who visited Hong Kong last week said at a press conference that the Basic Law, will be discussed by Parliament in the UK, and I do not doubt that the outcome of those discussions will reach the eyes and ears of those who are concerned with the future of the Basic Law. Certainly, we shall play our part in seeing that they do". I warmly welcome what Sir Geoffrey Howe said on returning from his visit.

As we know a lively and well informed debate is going on in the Hong Kong community, mainly under the aegis of the BLCC. Members of the drafting committee from China are visiting Hong Kong to hear the general reaction of the people. In this debate we in this House art anxious to know how the draft Basic Law is being received in Hong Kong; what are the subjects of greatest interest and which areas, if any, are causing concern.

The big question is whether the Hong Kong special administrative region will, after 1997, enjoy the high degree of autonomy promised in the joint declaration. Article 2 of the draft Basic Law deals with this clearly, or so it seems to me. It says that after 1997 the SAR will have the authority: to exercise a high degree of autonomy in accordance with the provisions of this law and to enjoy executive, legislative and independent judicial power, including that of final adjudication". That is a very positive statement. All the subsequent articles in Chapter 1, as noble Lords will have noted, under the heading "General Principles" would appear to underline the general statement in Article 2. Even so, from what we have read in the press and letters we have received, doubts, uncertainties and suspicions still remain in many quarters and, in my submission, it is the Government's responsibility to study these carefully.

One of the issues on which there has been a development disagreement is that of so-called democratisation. That was mentioned in our exchange on the White Paper in the House on 10th February. Personally I believe that there should be direct elections to the legislative council this year. On this side we believe that there should be more than the 10 proposed in 1991. Sir Geoffrey Howe does not disagree with this proposition. On January 20th in another place he said: In due course we need an element of direct elections—a modest proportion but certainly not going all the way … The question is one of timing … on that there is a difference of view … We need to secure a timetable for progress".—[Official Report, Commons, 20/1/88; col. 1017.] I agree with Sir Geoffrey on the point about a timetable but I do not want it to extend too far into the future. The Foreign Secretary seems to be saying that he has no objection to direct elections but that he does not want to throw a spanner into the works at a sensitive moment when other things are happening. It is a sentiment with which all former Ministers must have sympathy. Perhaps Sir Geoffrey will have something to say about that in the next few days following his recent visit to Hong Kong.

Several other points of concern have been passed to me and indeed to other noble Lords. I do not wish my speech to be too long or too detailed and I shall seek to summarise the worries of correspondents as briefly as I can. First, there is real concern about the authority given to the National People's Congress of China to return or to revoke laws passed by the legislature of the SAR under Article 16. Secondly, there is concern that laws passed by the National People's Congress on matters other than foreign affairs and defence, which were agreed to be reserved, will apply to Hong Kong. That concern refers to Article 17, which needs to be looked at carefully as it could in practice contravene Article 1 of the draft.

We then come to Articles 105 and 107, which need further careful discussion. Furthermore, the requirement to maintain a basic balance between total budgetary revenues and expenditure and to practise a low tax policy seems to be inappropriate in a constitutional document and could, as all of us know only too well, restrict the fiscal powers of a future administration. Perhaps the noble Lord, Lord Glenarthur, will give his reaction to that provision when he replies.

I also read Annexes 1 and 2 of the draft with great interest. These deal with selecting the chief executive and constituting the legislative council of the SAR. I am sure that these will be the subject of further discussion. It may be suggested that they do not make adequate provision for direct elections. Furthermore, Annexe 3 needs careful thought as its proposals may not provide for the continuity of government through the transitional period. It seems to weigh far too heavily on the side of the Chinese Government in appointing the executive. That does not tend to create the kind of confidence that no doubt both sides desire.

The House will further recall that the joint declaration provides that the executive shall be accountable to the legislature. The Basic Law makes no reference to this important constitutional requirement and no doubt that will be taken up in the discussions which are now proceeding.

A small ad hoc committee of young professional people in Hong Kong, led by Miss Gladys Li, has taken a proper and acute interest in the draft Basic Law since it was published. I believe she has sent to most noble Lords a letter and a memorandum dated 16th April. Most of us will have read them. Their comments about judicial independence as affected by Articles 18 and 169, on the precise extent of the high degree of autonomy referred to in the joint declaration and in Article 2, on the articles which deal with the economy and finance (Articles 103 to 115) and on the need for stronger guarantees on human rights, need to be given the most careful thought.

Miss Li and her colleagues make a telling point when they state in the memorandum: If China intends the Hong Kong SAR to be 'financially independent' as stated in Article 104, it should refrain from pre-empting—as Article 105 seeks to do—the Financial Secretary's freedom to make pragmatic economic policy decisions after 1997". Here again, I am sure the House will value the comments of the noble Lord when he replies.

Criticisms of the Basic Law were inevitable from the start. It is a detailed and complex document with 172 articles and three annexes. It will be subjected to scrutiny and placed under the magnifying glass many times over the next two years or so. The Chinese authorities anticipate this and we hope and expect that they will be receptive to reasonable argument. In my view, the future of Hong Kong depends largely upon the readiness to listen to reasonable argument.

We should pay tribute to the members of the drafting committee who have worked hard over the past three years to produce this draft and to bring together and blend two dissimilar systems of law. Let me repeat that the words which created confidence in the joint declaration were the promise of a high degree of autonomy for Hong Kong under the new dispensation. Do Her Majesty's Government believe that the draft Basic Law in principle fulfils that promise? Are they satisfied that at this stage there is reasonable hope that the draft will in due course be a reasonable document which will fulfil the original hopes set out in the joint declaration?

I have already mentioned the concern which exists as 1997 gets nearer; and that time will come all too quickly, as noble Lords know. The clearest evidence of this is emigration, which I believe has been running at between 3,000 and 4,000 a month from Hong Kong. That is a large figure. Perhaps the noble Lord can give the House the latest figures. The Government of Hong Kong, Her Majesty's Government and indeed the Chinese Government must consider what actions may be necessary to stem this outflow. Could it be more directly elected members to the Legislative Council? In my view, civic, community and economic stability are the key to confidence.

The Basic Law at present provides for 25 per cent. of the council to be directly elected. That is an encouraging step forward. However, I am sure that the Chinese Government know that they have nothing to fear from a further increase which will give more people a stake and an involvement in the future of Hong Kong. A comparatively small concession would go a long way.

I referred to the knowledge of Hong Kong which so many noble Lords possess. I am sure that the House is particularly glad that my noble friend Lady Ewart-Biggs and the noble Baroness, Lady Young, are due to speak in this debate. Both returned from Hong Kong last Sunday and they will no doubt have information of great interest to give us.

I have so far confined myself to the Basic Law because I believe it to be the most important issue in relation to the future of the colony. But there are other immediate problems. The most acute concerns the Vietnamese refugees who continue to flow into Hong Kong in large numbers. The noble Lord, Lord Glenarthur, told me in reply to a recent Question that he thought the problem might well be resolved before 1997. I am sure that we all hope he is right. However, many people are now beginning to have doubts, and I hope that the noble Lord will be able to say a little more on that issue.

In particular, I ask him to confirm that the British Government are reviewing the position and to expand on the comment made by his right honourable and learned friend last week—I quote Sir Geoffrey—that, most boat people are not political refugees proper". I understand that both my noble friend Lady Ewart-Biggs and the noble Baroness, Lady Young, and other noble Lords will say something about this distressing problem.

At this stage, this debate is no more than an interim look at the developing scene but I believe it is essential that the people of Hong Kong should know that the British Government, all opposition parties and the two Houses of Parliament are taking a lively interest in their problems and views at this crucial moment in their history. We hope to have further debates as the situation demands. Meantime, we hope that confidence and stability are maintained as discussions proceed. My Lords, I beg to move for Papers.

11.30 a.m.

Lord Bonham-Carter

My Lords, first, we must all thank the noble Lord, Lord Cledwyn of Penrhos, for raising this issue at this very timely moment. Secondly, I apologise to noble Lords and to this House because I have to depart at 12.45 p.m. for an engagement which I could not break, but I hope very much to return before the conclusion of the debate. Thirdly, I confess that, unlike many other of your Lordships here today I have not been to Hong Kong and I cannot pretend that I am particularly expert in its affairs. On the other hand, this does not seem a disqualification from participating in this debate, because what I hope and think the House should be doing is raising questions to which the noble Lord, Lord Glenarthur, may be able to give answers and to which this country, as well as the people of Hong Kong, have a duty to pay attention.

I shall inevitably cover briefly some of the same ground as that covered by the noble Lord, Lord Cledwyn of Penrhos, in his opening statement. The questions to which the Basic Law gives rise will be the same for almost all people, both for the inhabitants of Hong Kong and for the people of this country who have some reponsibility towards those inhabitants. I, like the noble Lord, Lord Cledwyn, start from the joint declaration and the statement in it that the Hong Kong Special Adminstrative Region will enjoy a high degree of autonomy, apart from foreign and defence affairs which are the responsibility of the People's Republic of China.

It seems that that proposition is entirely acceptable and a reasonable one to which one can take no exception. We continue from there to the statement from the Parliamentary Under-Secretary of State in another place on 10th March in which he said: The draft Basic Law is intended to implement the policies that are contained in the joint declaration that forms part of a solemn and internationally binding treaty between the People's Republic of China and the United Kingdom. He continues by saying: Therefore, it is right that the House should wish to give its views on the implementation of the treaty in the draft Basic Law."—[Official Report, Commons, 10/3/88; col. 679.] That is precisely what we are doing. What we should be discovering during the course of the debate today is how far those acceptable intentions set forth in the joint declaration are fulfilled in the Articles of the Basic Law. When one looks at it in that way a number of questions arise to which we should be given answers.

In another place the Minister whom I have just quoted said on the same date at col. 680: It also requres the proper involvement of the people of Hong Kong in the process, to ensure that their views are fully taken into account at all stages. One immediate question arises; namely, how effective are the processes of consultation in which we are now engaged and which will continue intensively between now and September? One recognises that the results of that consultation will require negotiation with the People's Republic of China. It is inescapable that no-one can foretell in what spirit the results of those consultations will be received by the Government of the People's Republic of China. Nonetheless, if the consultations are to mean anything whatever we must assume that the People's Republic of China is acting in good faith and that the conclusions reached by consultation will be considered reasonably by that authority. If anything else is the case then the process of consultation is a pointless exercise.

We come to the crucial issue; namely, to what extent does the Basic Law safeguard the high degree of autonomy? It is here, as the noble Lord, Lord Cledwyn, indicated, that one becomes worried. The joint declaration states unequivocally that the "high degree of autonomy" will only be limited by matters of "foreign affairs and defence". When one looks at the draft Basic Law we find that in Article 17 there are the following glosses: Laws, enacted by the National People's Congress or its Standing Committee, which relate to defence and foreign affairs as well as other laws which give expression to national unity and territorial integrity… Article 18, in the case of the jurisdiction of the Hong Kong Special Administrative Region, reads: Courts of the Hong Kong Special Administrative Region shall have no jurisdiction over cases relating to defence and foreign affairs, … and cases relating to the executive acts of the Central People's Government. I ask, what kind of autonomy is this? What interpretation is to be put upon executive acts of the PRC? What interpretation is to be put upon other laws which give expression to national unity and territorial integrity? Those are very broad words, open to very broad interpretation.

If I were living in Hong Kong and saw those glosses put as modifications of an unequivocal commitment to a high degree of autonomy, I should be worried that that autonomy was being eroded already and would be eroded further in the future. Beyond that, who is to interpret the Basic Law? It is here that we come upon a rare and fundamental difficulty. Who will interpret the law that defines the intentions of the joint declaration?

It seems that the problem which confronts the Basic Law and upon which its validity depends, is this: can one graft onto a system based on the common law, which is the system which pertains in Hong Kong today, one which has no conception, culturally or historically, of such a system? That is what we are trying to do and it is a most ambitious and difficult project. For example, who will resolve a conflict between the Hong Kong Special Administrative Region and the People's Republic of China about the interpretation of the Basic Law?

Under our system we would answer quite simply by saying that it would be up to the judiciary. Articles 17, 18, 19 and 169 and the glosses to which I have referred, may demand interpretation. As I understand the Basic Law, that interpretation will be undertaken by the State Council of the People's Republic of China. The State Council of the People's Republic of China is de facto the government, the legislature and also the interpreter of laws. Therefore, we have a situation in which our idea of law interpretation by an independent judiciary simply does not exist.

Therefore, one very important question that noble Lords must consider and continue to watch is in what manner Basic Law—no matter how good and how well it is drafted, and how good are its intentions—is to be interpreted and how the differences in its interpretation between the Hong Kong Special Administrative Region and the People's Republic of China are to be resolved. This is the central issue we have to confront.

As the noble Lord, Lord Cledwyn, said, there are other more immediate concerns, to which I hope the noble Lord, Lord Glenarthur, will address himself when he comes to reply. I wholly agree with what the noble Lord, Lord Cledwyn, said about elections. The process of consultation between now and 1997 will be difficult if it has to be done indirectly. We are accustomed on the whole to consulting via people who are elected. Elected representatives are in our view the best representatives to express the opinions of those whom they represent. Therefore one wonders why the process of electing a relatively small proportion of the Legislative Council has been postponed.

One must inevitably be deeply disturbed by the massive emigration of boat people from Vietnam which has gone on and is going on. One would welcome any information the Minister can give us as to the steps the Government are taking to deal with this.

Finally, I hope that in the course of the debate we shall hear the noble Lord's views on the very substantial emigration from Hong Kong of some of its most important and talented figures, who appear to be going to Canada, Australia and the United States. It is undesirable that they should leave Hong Kong, which lives on its wits and is bereft of raw material except intelligence and therefore needs high-quality people to stay there if it is to survive. They will do so only if confidence in the future of Hong Kong is established. That confidence will be established only if the kind of considerations that have been raised in the debate are satisfactorily answered by the Government and by the Chinese People's Republic. That having been said, one can only hope that the best interpretation can be put on the Basic Law. I look forward to reassurance on this matter from the noble Lord in the course of his reply.

11.43 a.m.

Baroness Young

My Lords, I am sure that the whole House is grateful to the noble Lord, Lord Cledwyn of Penrhos, for introducing this important debate today. I spoke on this important part of the world, Hong Kong, on a number of occasions as a Minister in the Foreign and Commonwealth Office. However, this is the first opportunity I have had to speak after a personal visit to Hong Kong. Once again I discovered the great truth that there is no substitute for a visit and a look for oneself. I should like to start by placing on record my gratitude to the Hong Kong Government for arranging such an interesting and valuable programme. In saying that, I am sure that I speak on behalf of the noble Baroness, Lady Ewart-Biggs, and my noble friend Lord Torrington.

No one can go to Hong Kong without being conscious of its booming economy. I had always read of this and I was reassured that there was no sign of a crisis of confidence among international investors. The container port, I was told, has just overtaken Rotterdam to become the first container port of the world. There are two industrial estates and a third is planned. Talk was all about the necessity for a new airport, better communications with China and better roads in Hong Kong. A second tunnel is being built under the sea between Kowloon and Hong Kong Island. I could go on. Never have I been to a more stimulating, vibrant and economically successful place. There is full employment, rising real wages, two years of double-digit growth and a mobile labour force. It is all incredibly impressive.

The full meaning of the words "maintaining stability and prosperity", which I have used and which have been used today, came home to me in a very real way. However, beneath the vitality and prosperity there are real concerns which express themselves in different ways. One of the most serious is the flight of the professional middle managers and entrepreneurs. It was difficult to get reliable figures. A number of different ones were given, but generally it seemed to be thought that some 27,000 people left in 1987 and that possibly as many as 37,000 will leave in 1988. As we would put it, unhappily people are voting with their feet.

What, if anything, can we do? The truth is that Hong Kong people have emigrated throughout time. Most, after all, have already come from mainland China, and most would like to return to Hong Kong because of its economic success. One thing is quite clear. We should bring all our influence to bear wherever we can to try to meet the concerns of the people of Hong Kong over a number of matters, including that of the Basic Law, the specific subject of the debate today.

When one reads the Basic Law, and when one reads again the joint declaration, one cannot help but be struck by how amazing it is that the Chinese Government have set out this long period of consultation about the Basic Law—five months this year, followed by further discussions, and then another round of consultation. This is the first part. During my visit Mr. Ji Pengtei, the Chinese official responsible for Hong Kong matters, visited Hong Kong. Who would have thought five years ago that he would arrive and be reported as saying that he wished to come to hear the opinions of the people of Hong Kong? This is greatly to be welcomed.

In discussing the concerns about the Basic Law and about other matters it is important to acknowledge the progress that has been made. As my right honourable and learned friend Sir Geoffrey Howe said in Hong Kong, agreement has been reached on a number of international agreements. There is, for example, Hong Kong's separate membership of GATT and agreement on Hong Kong's participation in a number of international organisations. There are wide-ranging agreements on travel documents, air services and civil service pensions.

In considering the Basic Law, my colleagues and I had the opportunity to talk to Omelco, to the urban councillors, to the Group of 88, to the Far Eastern Economic Review Group and to many others, in particular businessmen and women and bankers of different shades of opinion. One important point emerged. They all want the Basic Law to come into line with the text and spirit of the joint declaration. They rely on the United Kingdom to explain these concerns and to put Hong Kong's views to the Chinese Government, though we ourselves are not a direct party to these negotiations.

It would be easy to devote a long speech to a textual analysis of the differences between the joint declaration and the Basic Law. I should like to touch briefly on four areas of concern to re-emphasise the points. I refer first to the judiciary. Paragraphs 56 to 60 of the joint declaration provide for the continuation of the present common law system and for an independent judiciary. The power of final judgment is vested in the Hong Kong courts. It is important that those provisions are faithfully reflected in the Basic Law. For example, Article 169 of the Basic Law gives the power of final interpretation of the Basic Law to the NPC Standing Committee.

Then there is the question of the autonomy and the protection of basic rights. There is a belief that the principle of "one country two systems" has not been fully reflected in the Basic Law. Sovereignty has been emphasised to the detriment of the high degree of autonomy promised to the special administrative region in the joint declaration. The articles on human rights are especially thought to be defective. For example, Article 39 of the Basic Law could allow the SAR legislator to enact laws to restrict basic human rights beyond the limits permitted by the two international covenants on human rights.

There is also the importance of continuity; continuity between what exists now and what will exist after 1997. The arrangements contained in Annexe III concerning the formation of the first special administrative region government appear to constitute a sharp break in the commitment to continuity of administration after 1997.

Finally there are a number of provisions in the Basic Law, which have already been quoted, which seem to me to be inappropriate and which I think many people would regard as inappropriate in a constitution; such as, the need for a balanced budget. However, much as I support that general principle it is not something that one would normally write into a constitution. Indeed, there are other such matters. The serious point is that these provisions could well be found to be most restrictive for some future government.

There are two further areas of concern. However, if I do not go into either of them in great detail it is not because they are not important—they are; it is because time does not allow me to do so. The first was touched upon by the noble Lords, Lord Cledwyn and Lord Bonham-Carter, and that is the whole question of moving towards democracy. Clearly there are divided views, as one might expect, on so important a subject. There have already been some direct elections and there will be 10 more elected people by 1991. It is the intention to move towards an all-elected legislature.

However, the truth of the matter is that in moving slowly we have let the genie of democracy out of the bottle and, having let it out, it is difficult to control. Of course there is a fear that China will put a cork in the bottle which would raise many difficult problems. One can listen to all those arguments but it is difficult for an outsider to stand in judgment and say what it is that the people want. The fact is that they are moving towards a directly elected legislature, but for some people, especially the professionals and the intellectuals in Hong Kong, they are moving at far too slow a pace. They feel themselves to be disregarded and that their views are not taken fully into account. Nevertheless, as we all know, it is very difficult to determine exactly what people want on these constitutional issues. One can only hope that stability and prosperity—one goes back to those two important words—will be maintained.

Another area in which the British Government have an important role to play—and it has already been touched upon—is in connection with the Vietnamese refugees. There is intense resentment in Hong Kong that the Chinese refugees are stopped coming into Hong Kong at the points of entry; whereas the Vietnamese refugees appear to be allowed in—and they are coming into Hong Kong in increasing numbers. Indeed, since leaving Hong Kong last weekend I understand another 200 or 300 more have arrived.

We had the opportunity to visit one of the closed camps which I thought, under the circumstances, was kept remarkably well. I was much struck by the medical arrangements for the refugees. However, having said that, it was grossly overcrowded and some people had spent up to five years in the camp. Under no circumstances can that situation be regarded as anything but appalling for the people involved. Therefore I greatly welcome the reported remarks of my right honourable and learned friend Sir Geoffrey Howe, that we are looking actively at the matter to see whether we can determine those refugees who are genuine refugees and those who are coming to Hong Kong merely because they are looking for a better life from the economic point of view. We cannot allow the situation to continue as it is at present. There is a real sense of urgency about it. Therefore I ask my noble friend Lord Glenarthur to look with some urgency at the matter and give an indication that something will be done, because I think the situation is currently worsening and it is one which none of us would wish to see continue. It is a matter within our control and we should do something about it.

I have mentioned many concerns. I have also mentioned the vitality and prosperity of Hong Kong. In my view, at the end of the day, although I hope that the areas of concern in regard to the problems over democracy and the problems over refugees will be put right, the big issue is that of the Basic Law. It is that which is generating the outflow of talented people from Hong Kong, and it is a matter of trust; that is, trust in our relations and Hong Kong's relations with China.

Many people pointed out how far China is linked to the prosperity of Hong Kong. China is Hong Kong's largest trading partner. All the time China receives enormous sums of money in remittances from the Chinese people who are living in Hong Kong. Hong Kong is its largest source of foreign currency. I understand that 80 per cent. of investment in southern China is from Hong Kong money. There is considerable Chinese investment in Hong Kong itself. I was interested when visiting the Hong Kong Bank to be told that the Bank of China building was being erected next to it and it would be an even taller building so as to make that point quite clear.

Interestingly, I was told that between 1 million and 2 million Chinese people are employed by Hong Kong industries within China itself. I was also told that the productivity in some of those industries is in some cases higher than that of Hong Kong. Unquestionably the Chinese Government are learning a great deal about what an efficient free enterprise economy means from the talented Hong Kong people who are working there.

All that I have said has to be seen against a background where not so long ago the border with China was closed. Therefore both on the political front, and on the economic front, we can see that there are extraordinary developments taking place within China itself, especially in Canton which is near and adjacent to Hong Kong. Indeed, on a helicopter flight over the border it was possible to see something which looked extraordinarily like Hong Kong but which was in fact growing just on the other side of the frontier without, one imagines, all the problems of building tall on a very small space. Those developments must be put in the balance when one comes to judge what the issues are. In other words, when considering the future of Hong Kong, one must consider the changes taking place in China. Whatever happens in Hong Kong, and whatever China's treatment of Hong Kong may be, one country will be watching closely; namely, Taiwan.

In conclusion, I hope that my noble friend Lord Glenarthur will be able to give the people of Hong Kong the kind of assurances that I think they want; namely, that Britain is standing behind them over their concerns on the Basic Law. I hope that we will take the opportunity to raise those concerns in all the appropriate fora so that it is known that we want the points to be in line with the context and spirit of the joint declaration. I hope that on matters such as the Vietnamese refugees, where we have a direct chance of dealing with the issue, we will do what we can in pressing the Vietnamese Government in relation to the serious situation that exists on the ground.

All of Hong Kong's friends, with whom I would number myself as one, want nothing so much than that those words "stability and prosperity" will continue to mean in the future what they do today.

12 noon

Lord MacLehose of Beoch

My Lords, I should like to congratulate the noble Baroness, Lady Young, on her speech. I was delighted by her positive reaction to her recent visit to Hong Kong. Perhaps I may also say how good it is to see so many of your Lordships participating in this debate on a summer Friday morning. As the noble Lord, Lord Cledwyn, said, the drafting of the Basic Law, which is what we are considering this morning, is the responsibility of the Chinese Government, but there is a British obligation, which is to satisfy itself that in the end the Basic Law fulfils precisely the commitments of the joint declaration.

I, like the noble Lord, Lord Cledwyn, welcome the fact that on Tuesday the Foreign Secretary emphasised that point to his Chinese colleague. It is most important that when the drafting of the Basic Law has reached an appropriate point the Government will be prepared to state whether it does or does not fulfil the commitments of the joint declaration and will enable Parliament to debate it.

The implementation of the joint declaration—the subject of the debate—has in my view made steady progress. Indeed, the two governments are to be congratulated on the work of the joint liaison group and on the substantial area covered in the first draft of the Basic Law. The text of the eventual law will of course be crucial to Hong Kong; but the draft is merely what it says; that is to say, a first draft. In my opinion it provides a good basis for consultation and further progress through redrafting this autumn. All in all, the progress and implementation of the joint declaration is good, even though much remains to be done.

However, handing out congratulations will not assist the drafting committee. It has solicited opinions, and in the same spirit I shall give mine, for what they are worth, given that the general sense of opinion in Hong Kong and, in particular, of the Legislative Council has not yet been received, although we have had some valuable notes from some groups.

There is much that could be commented upon; for instance, the restraints on the proposed SAR budget which have already been mentioned. I shall confine myself to three general points. One of the major groups of issues, which I think need further consideration by the drafting committee, is the definition of the relative powers and competence of the National People's Congress and its standing committee on the one hand, and of the legislature and judicial courts of the Hong Kong SAR on the other. They are referred to in Articles 16, 17 18 and 169 which have been mentioned by all previous speakers.

While the sentiments in the articles may in theory be unobjectionable, the reservations in favour of the legislation of the congress and the powers of the standing committee, including its powers of interpretation which were so emphasised by the noble Lord, Lord Bonham-Carter, seem unnecessarily widely drawn for practical purposes.

Obviously, the People's Government and the standing committee should have a role consistent with China's sovereignty and the joint declaration; but I suggest that the drafting committee will need to look carefully again at those articles so that central government powers and policies and the SAR's high degree of autonomy are more correctly and consistently balanced.

The draft focuses on options for different forms of election. The noble Baroness, Lady Young, referred to that point. There has been sharp debate in Hong Kong about electoral systems and the timing of their introduction. Some of those favouring quick, universal, direct elections claim, in all sincerity, that that procedure will help to insulate Hong Kong against interference from Peking. I must confess that that logic seems dubious, because if interference were intended an electoral system could be used to further it as well as any other method.

The purpose of the concept of "one country, two systems" and of the joint declaration was such insulation. I think that the immediate requirement is to obtain wording for the Basic Law that clearly and correctly reflects those concepts rather than in any way to be diverted into seeking them through one electoral system or another.

However that may be, it seems desirable that as soon as possible a consensus in Hong Kong should be reached on a method of electing the present legislative council. I do not wish to put forward any view on what that should be. It should be done as soon as possible so that an acceptable method for the legislature of the SAR can be agreed. Surely it is desirable that an electoral method, suitable for the SAR, be introduced and running well in advance of 1997 so that at that point continuity of the legislature, as well as the public service, could maintain confidence and assist the new chief executive.

I suggest that in the 1997 scenario, it is crucial to let everyone know what to expect and what to aim for as soon as possible. That brings me to my third point, which is Annexe 3, about which the noble Lord, Lord Cledwyn, and the noble Baroness, Lady Young, have spoken. That annexe would affect the whole composition of the legislature at the moment of transition. The practical implication would be that no one would know, up to 1997, what the composition of the legislature would be after 1st July of that year.

I should have thought that that uncertainty was likely to invite rumour, suspicion and speculation, just when there will be the greatest need for calm and confidence. I understand the need for change in the exercise of sovereignty to be appropriately marked, but I hope that the drafting committee can devise some way to achieve that without affecting those members of the current legislature eligible to continue to serve. I hope that it will take another look to see how the principle of sovereignty should be reconciled with the other principles that are applied; that is, the principles of smooth transition and continuity.

I do not wish to detain your Lordships for long. I conclude with two thoughts only. The first is that from what has already been said this morning, your Lordships must appreciate the complex and many-sided pressures under which Hong Kong is at present being governed and under which progress is steadily being made to work out its future. In the circumstances, and given the success with which he is grappling with those twin problems, our support and commendation are due to Sir David Wilson.

Secondly, I wish to point out that comment on the draft Basic Law inevitably focuses, as previous speakers have done and as I have done, on what one thinks is wrong in it. That should not detract from the underlying fact that a substantial amount is along satisfactory lines and that offers real hope that a major effort by all concerned over the next year could get the bulk of it right.

12.10 p.m.

Lord Kennet

My Lords, I think the noble Lord, Lord MacLehose, could well have detained the House for longer than nine minutes if he had wished, because there is no other Member who knows as much as he does about Hong Kong, to the present condition of which he so largely contributed. I also wish to congratulate the noble Lord, Lord Cledwyn, on his methodical and humane introduction of the subject of debate this afternoon and to state that I for one agree, I think, with everything he said.

I shall start my remarks about the draft Basic Law on the question of the relationship between Chinese sovereignty and Hong Kong local autonomy, as is reflected in the draft Basic Law and particularly in the portions dealing with the functioning of the legal system, the judiciary, in Hong Kong after 1997. Many noble Lords have agreed, and I too agree, that the fact that foreign affairs and defence are reserved to the centre in Peking is absolutely normal and to be expected. Consequently the courts of Hong Kong should not have jurisdiction in matters "affecting" foreign affairs and defence. There is a frontier problem here, of course, because many matters will concern foreign affairs or defence in a trivial manner and their principal content will be local to Hong Kong, whether we are talking about criminal or civil jurisdiction. However, I think that is something which can be left to be worked out without undue disquiet on the part of this Parliament at this stage.

The remaining matters which are reserved by the draft Basic Law to Peking, and particularly the "executive acts" of which my noble friend Lord Bonham-Carter complained—he complained about their reservation—are at another level of difficulty altogether. I for one would welcome some guidance about what we believe Peking means by "executive acts". I simply do not know what the phrase means in Chinese. It could mean pretty well anything done by the Peking Government. In that case it would not be possible to subject the proceedings in the Hong Kong courts to it. That would certainly be dangerous, and it should not be allowed to pass by us here, or, I hope, by the Hong Kong negotiators on the drafting committee.

Again, there is the question of the interpretation of the Basic Law. My noble friend Lord Bonham-Carter seemed unsure as to who would do the interpreting. He pointed out the desirability of it being done by the judiciary somewhere. As I read the Basic Law, it is all too clear who does it. Perhaps noble Lords will turn to Article 169, which I shall read, since I wish to get it into Hansard. It is a very clear turn of phrase. The power of interpretation of this Law is vested in the Standing Committee of the National People's Congress. When the Standing Committee of the National People's Congress makes an interpretation of a provision of this Law, the courts of the Hong Kong Special Administrative Region, in applying that provision, shall follow the interpretion of the Standing Committee". It also says that the Hong Kong Special Administrative Region courts must apply in certain circumstances to the Standing Committee of the National People's Congress for an interpretation before undertaking the hearing and judgment of a case. I very much hope that that provision will not last through the consultation period.

To me, the heart of this report is the means of producing an executive and legislature in Hong Kong after 1997; namely, the election law. It strikes the eye at once that the report presents a surprisingly wide spectrum of alternatives—four. That can only be extremely good news. That the government in Peking should be prepared to go public with four alternatives, which it considers at least worthy of discussion on the crucial point of Hong Kong autonomy and democracy, can only be a very good sign for the future.

It makes the draft Basic Law itself necessarily a very preliminary document and because of that fact I think it poses certain problems for our Government in the matter of convergence. When we started down this road between London and Peking, "convergence" was the watchword. The development of Hong Kong internally between the joint statement and 1997 was regarded as being something to be handled in such a way as to bring London and Peking together at the last moment, to converge on the desired final stage.

The great thing is that this Basic Law, as regards Hong Kong elections, does not give a final state on which any convergence can be done. There is nothing to converge on—not yet. There is a danger in that it will put off all the converging until quite a late stage in the period before 1997, when it may be hurried.

Let us look now at the spectrum of choices offered. The worst alternatives are a caricature of the secret and bureaucratic constitution. They show members of the future executive and legislature appearing by the choice of persons unnamed from bodies which have themselves been empowered by persons unnamed and which have no recognisable membership that could form an electoral roll. These alternatives freely use the word "election" when they seem to mean "selection". They are—not to put too fine a point on it—in Kafka land. The best alternative—by which I mean the second of the four set out in Annexe II—takes the proposed constitution exactly 51 per cent. of the way to direct democracy.

I wish to raise once again the problem of elections which I have raised on at least two occasions before when the matter has been debated in this House. Do we believe that democracy by direct general election is in some way the best and most just of all the ways of government which exist? If we do, have we any right not to introduce it into Hong Kong before 1997? Have we any right not to introduce 100 per cent. of it before 1997? Our judgment of this question must depend on our judgment of what would be the likely Peking reaction if we did so. If we did so, and if China extinguished it when it took over, that is China's business.

I do not quite follow the argument of the noble Lord, Lord Mac Lehose, if I understood it rightly, that elections could be used by Peking as a means to reduce Hong Kong independence as well as any other means. It seems to me that free elections are in themselves rather a means of preserving the liberties of the people and preventing their reduction. They are not to be classed with bureaucracy or military tyranny in a list of equal means of reducing popular liberties. My own belief, which is based on discussions in both Peking and Hong Kong over the years, is that whatever government is in power in Peking in 1997—it is unlikely to be anything like the present one—will be unwilling to extinguish whatever liberties Hong Kong may then have. The prosperity of Hong Kong which is so obviously important to China depends on that, and that is well understood in Peking.

If I am right, then it is up to us to launch Hong Kong on its future within China with liberties as broad and as inextinguishable as we can now obtain from Peking. When I say "we can now obtain from Peking", I am speaking in the very broad "we" of London and the colonial Government of Hong Kong acting together. How far that is possible I am in no position to say, but I hope that most Members of this House would agree that 51 per cent. direct general election well before 1997 is the absolute minimum, and that it would be better to have a legislature, from which is drawn an executive council, which has a clear majority of directly elected members leavened by a sizeable minority of indirectly elected, or proportional, or corporate members, or even conceivably by some appointed members.

12.21 p.m.

Lord Irvine of Lairg

My Lords, I have in the past six or seven years visited Hong Kong about two or three times in each of those years. I can, I think, lay fair claim to being a friend of Hong Kong and an admirer of its energy and vitality. I was in Hong Kong at the time of the joint declaration. I well recall the excitement and the debate that it engendered. It is right to say of the Foreign Secretary, Sir Geoffrey Howe, that it represents on his part a triumph of imaginative diplomacy.

I can also, I think, lay fair claim to some experience over these years of the Hong Kong legal system. That is a system which is of very high quality indeed and one that is held in high regard internationally. The joint declaration provided for a Basic Law of the special administrative region to be drafted by the National People's Congress of the People's Republic of China.

The joint declaration was in both the English and the Chinese languages, both texts being equally authentic. It stipulated that English might be used, in addition to Chinese, both in government and in the courts. Thus, I hope we will find that the Basic Law in due course will also be set out in both languages, with the English text being equally authentic. I ask the Minister to confirm whether there will be, in due course, such a text.

The Basic Law is the constitutional instrument from which all other laws derive their legitimacy. The laws previously in force in Hong Kong, essentially English law, will continue to apply after 1997, apart from any that contravene the Basic Law. It is important for Hong Kong's future as an international commercial centre that the status of the English language is not lowered. For "one country two systems" to work, there must surely be an authentic English text of the Basic Law.

I agree with the noble Baroness, Lady Young, that every group in Hong Kong is looking to this country to ensure, so far as it can, that the Basic Law is faithful in letter and spirit to the joint declaration. One of the most important characteristics of the Hong Kong system is its legal system. One of its key characteristics is the right of the courts to interpret and develop the law. In that, as has been pointed out, it differs from the mainland system. In China courts do not have that right. That is reserved to the National People's Congress which both enacts and interprets laws.

In Hong Kong today, just as in England, the legislature can change the laws but does not interpret them. The joint declaration had stated: after the establishment of the Hong Kong Special Administrative Region the judicial system previously practised in Hong Kong shall be maintained; … The courts shall exercise judicial power independently and free from any interference.". I therefore join with other noble Lords in registering great concern that this has not been carried into the draft of the Basic Law. It provides that the power of interpretation of the Basic Law shall be vested in the Standing Committee of the National People's Congress.

I hope that the Government will think it right to try to persuade our Chinese friends that this should be changed. I entirely appreciate that the Basic Law will be Chinese law; that it will be promulgated by the National People's Congress; and that our Chinese friends may feel that it should be treated like all other Chinese laws, that is, subject to interpretation by the National People's Congress.

But I hope that the Government will say something along the lines of the following, and that China will listen sympathetically. The Basic Law is different from any other Chinese law. It will have practical effect only in Hong Kong. It does not therefore need to be interpreted by the National People's Congress for the benefit of courts elsewhere in China. The Basic Law is to be the foundation of Hong Kong domestic law. It should be interpreted by the Hong Kong courts and, if it is not, the Hong Kong judiciary will not be seen to be independent. There is in Hong Kong a vast amount of litigation of an international character, which is part and parcel of Hong Kong being a great international commercial centre. The international community respects and trusts Hong Kong's independent judiciary.

The joint declaration had declared that the courts of the Hong Kong Special Administrative Region would be vested with: the power of final adjudication.". I hope the Minister will feel able to say in reply to this debate that he shares my concern that the draft Basic Law has seriously departed from an important part of what was agreed in 1984. The draft Basic Law proposes that the final court of appeal in Hong Kong shall be subject to decisions made by the National People's Congress. Article 169 has already been cited by other noble Lords. I hope that the Government will put to our Chinese friends the case for changing this. The joint declaration had provided that the region would be "vested" with: independent judicial power, including that of final adjudication.". Both these promises are undermined by Article 169. Surely, again in the interests of "one country two systems", the Hong Kong system should not be made subject to the mainland system. There is another highly troubling deviation in the draft Basic Law from the joint declaration. The joint declaration had stated quite clearly—I quote from Part II of the Annex which discusses the laws in the special administrative region: the laws of the Hong Kong Special Administrative Region shall be the Basic Law, and the laws previously in force in Hong Kong and laws enacted by the Hong Kong Special Administrative Region legislature. So that was quite clear. After 1997 the laws would consist of existing Hong Kong laws; the Basic Law; and those laws enacted by the new Hong Kong legislature. But the draft Basic Law contains a very troubling provision, and I shall read it in full. The noble Lord, Lord Bonham-Carter, has already referred to it. It states: Laws enacted by the National People's Congress or its standing committee which relate to defence and foreign affairs as well as —I emphasise the following words—: other laws which give expression to national unity and territorial integrity and which, in accordance with the provisions of the law, are outside the limits of the high degree of autonomy of the Hong Kong Special Administrative Region, shall be applied locally by the government of the Hong Kong Special Administrative Region by way of promulgation or legislation on the directives of the State Council, whenever there is the need to apply any such laws in the Region. I must say, and I hope the Minister will agree, that this appears to be in direct conflict with the joint declaration. Laws concerning defence or foreign affairs are one thing, but I find the rubric: other laws relating to the expression of national unity and territorial integrity, both vague and worrying. I share the reservations of the noble Lord, Lord Bonham-Carter, about that provision.

I also have difficulty in seeing how the provision squares with China's constitution. In 1982, China's National People's Congress amended the Chinese constitution to include an important new article, Article 31. It provided: The state may establish special administrative regions when necessary. The systems to be instituted in special administrative regions shall be prescribed by law enacted by the National People's Congress in the light of specific conditions. That article was introduced for such areas as Hong Kong. It was intended to keep mainland law away from such regions, except for special laws such as the Basic Law: enacted by the National People's Congress in the light of specific conditions. The provision of the draft Basic Law to which I have just called attention appears to be a potentially serious departure both from what was always understood to be the intent of Article 31 of China's constitution and from the joint declaration.

Perhaps I may add a word or two about human rights. The joint declaration was heartening. It declared that the provisions of the International Covenant on Civil and Political Rights should remain in force in Hong Kong and that human rights and fundamental freedoms would be ensured by law in the Hong Kong Special Administrative Region. That, I think, can only have meant that the region was to have an enforceable Bill of Rights. Encouragingly at first sight, the draft Basic Law provides: The provisions of the International Covenant on Civil and Political Rights and the International Covenant on Economic, Social and Cultural Rights as applied to Hong Kong shall be enforced in accordance with the law of the Hong Kong SAR. But these covenants are not written into the Basic Law. There would be no difficulty in doing so. One of the five authentic versions of these covenants is in the Chinese language. What we find in the Basic Law is a statement of fundamental rights that are to apply in the Hong Kong SAR, essentially in Chapter 3, supplemented by a few provisions in some of the other chapters; that is, a purpose built Bill of Rights but one which I have to say is deficient by comparison with the international covenants.

I do not wish to lengthen this speech unduly but I urge those concerned to scan the relevant provisions of the Basic Law line by line and to note every occasion where it does not match up to the international covenants. Without attempting to be exhaustive, I shall list a number of human rights, universally accepted as human rights, to which the Basic Law makes no reference at all. I take all my examples from articles of the International Covenant on Civil and Political Rights.

The draft Basic Law makes no reference to the right to life (Article 6); to freedom from torture and cruel, inhuman or degrading treatment or punishment (Article 7); the freedom from forced or compulsory labour (Article 8); the minimum rights of prisoners (Article 10); the right not to be imprisoned for inability to fulfil a contractual obligation (Article 11); the rights of aliens lawfully in Hong Kong (Article 13); the right not to be subjected to retroactive criminal law (Article 15); the right to recognition as a person before the law (Article 16); the rights of children (Article 24); and the rights of minorities (Article 27).

There are many provisions of the draft Basic Law which provide for human rights in specific areas, but less comprehensively and less satisfactorily than the international covenants. I do not like, for example, the provision of the draft Basic Law which provides that Hong Kong inhabitants, shall not be unlawfully"— I underline the word "unlawfully";— arrested, defamed or imprisoned". I think that that may have been borrowed from the Malaysian constitution. "Unlawfully" means that the legislature is free to prescribe whatever grounds it may choose to take away individual liberty.

I have similar criticisms of other provisions of the Basic Law. Freedom of speech of the press and of publication is guaranteed "in accordance with law". Again, it is "unlawful" search or "unlawful" entry into the home that is prohibited. Correspondence and telephone communications can be intercepted "according to the procedure prescribed by law". A person may travel "if he holds a valid travel document". Constitutional lawyers know only too well that provisions of that kind provide no absolute guarantees. The legislature of the Hong Kong SAR will be free to encroach in any way it chooses on any of these rights.

With great respect for all those concerned with the draft Basic Law, I suggest that the most straightforward way of carrying into effect the commitments on human rights contained in the joint declaration is either to write the international covenants in their entirety into the Basic Law, to have the Hong Kong SAR enact them in future or, better still, with the agreement of the People's Republic, to have the Legislative Council enact the international covenants here and now.

The draft Basic Law is an important further step in the long march to 1997. Its authors are to be congratulated on their initial efforts. I hope that all those concerned will see some wisdom in altering some of its provisions in the respects to which I have endeavoured to call attention.

12.35 p.m.

Lord Derwent

My Lords, those of us who are concerned with Hong Kong on a daily basis are grateful to the noble Lord, Lord Cledwyn of Penrhos, for giving us the opportunity to take stock at this important stage in the implementation of the joint declaration. I venture to speak in this debate because I am able to do so from a slightly different angle to some, though not all, of your Lordships. I have the honour to be part of what is now perhaps the largest business group in Hong Kong. It accounts for nearly 20 per cent. of the capitalisation of the stock market. Its controlling shareholder and most of its remaining shareholders are Hong Kong Chinese. Furthermore, over 95 per cent. of the group's assets are in Hong Kong. Therefore, the subjects under discussion today are not of merely academic interest. Our whole future is at stake.

I should make it absolutely clear that the views which I shall put forward are my own and are not necessarily those of my colleagues. Perhaps I may also express my apologies to the House in that, should the debate continue beyond 2.30, I shall have to leave to attend an unavoidable engagement. To help ensure that that does not happen, my remarks will be as brief as possible.

I am constantly asked whether my Hong Kong friends are not worried about life after 1997. The answer is, that of course they are worried. They are capitalists and their employees are workers who are prospering under the capitalist system. They will soon have to be dependent on a communist state. It must not be forgotten that many of them are refugees from the mainland. At the same time, they are Chinese and they feel 100 per cent. Chinese. They are excited by the prospect that Hong Kong may become the financial and commercial engine room for the country with the largest population on earth.

In a recent speech in New York, the chairman of the Hong Kong and Shanghai Bank—a respected Scottish banker who is not given to wild flights of fancy—said that he saw 1997 as an opportunity, and not as a threat, for Hong Kong. The People's Republic of China now comprises about one-fifth of the world's inhabitants. One American think-tank has calculated that on present projections the economy of China, including Hong Kong, could be the second largest in the world by the year 2010, surpassing both the Soviet Union and Japan. The people of Hong Kong see themselves facing great possible risks and also great possible opportunities. That is something which has occurred frequently in Hong Kong's history. However, this time the stakes are higher than ever.

I confess that I find much of the debate in Britain outside your Lordships' Chamber about the future of Hong Kong distressingly theoretical. That has been particularly so since the publication of the first draft of the Basic Law. While we have been the colonial power we have had the wisdom not to seek to impose our Westminster style institutions too precisely on a country and a population whose circumstances and needs are quite different from our own. While it has been pointed out that there are differing views within Hong Kong on the speed with which democracy should be introduced I am bound to say that I do not myself feel that that is the most important issue at stake.

It is fair to say that the absence of full democracy in Hong Kong has never until now stopped the Hong Kong Chinese from prospering or leading their own lives in their own way. Nor has the majority of the population shown much interest in copying our political system in the past. They have been quite content to see us exercise the ultimate authority provided we did not interfere too much with their daily lives. I believe that what most individual Hong Kong Chinese really want after 1997 is to be allowed to carry on as before.

From the beginning of Hong Kong as a colony until today its people have in fact enjoyed no political rights which theoretically at least could not have been changed by the intervention of the Westminster Parliament—over 10,000 miles away and populated by non-Chinese. Whatever the safeguards and whatever the legal pieties, that is the truth. What is happening is that after 1997, for Westminster we must read Beijing.

Your Lordships may however regard it as a sign of considerable statesmanship on the part of the Beijing Government that they have been prepared to limit their total freedom of action post-1997 by entering into a solemn international agreement to do so. Hong Kong therefore will be exchanging total dependence on a colonial power for dependence on a China limited by international obligations freely entered into and accepted by Beijing.

But, some say, there have been great upheavals in China in the recent past, and even if one accepts the good faith of the present government in Beijing such upheavals may recur. What then? The question is entirely fair. My answer is that if the worst occurred, if there were another cultural revolution in China or a dramatic heightening of East-West tension, debates on the details of the Basic Law and the degree of autonomy or otherwise in Hong Kong would be largely irrelevant anyway. I cannot believe that Hong Kong could prosper in such circumstances whatever the Basic Law may say. The same would probably have been true even if Hong Kong had still been a British colony.

I suggest to your Lordships that even in such dreadful circumstances Hong Kong would probably be better off now that its relationship with the rest of China has been explicitly recognised and enshrined in an international agreement than it has been in the past when the relationship between Hong Kong and China was based on treaties between Great Britain and the pre-revolutionary China which were never recognised by the People's Republic. In any event, we are not faced with the China of the cultural revolution but with a country which has made and is making enormous advances in its efforts to open itself to the outside world.

I have no doubt that the present government in Beijing are absolutely genuine when they say that they wish Hong Kong to prosper and that their commitment to "one country two systems" is total. The likelihood is that future Chinese governments will hold the same view.

The reason I say that with such confidence is that I am quite sure that the only reason they have reached such a policy is entirely on the grounds of their own self-interest. The PRC today is an underdeveloped country. Suddenly, in one bound, through the quirks of history, they can acquire one of the most sophisticated financial and commercial centres in the world to whose dynamism the noble Baroness, Lady Young, has just paid tribute. Thus they can jump forward about 50 years overnight. It must be their policy to bring that about.

To achieve that they must acquire Hong Kong as a going concern. Otherwise what have they done? They have acquired a densely-populated barren rock and merely added to their own internal problems. It is because the prize is, for China, so glittering that they have been prepared to accept what must be for them—and let us look at it from their point of view—domestically an extremely awkward concept of one country two systems.

That concept is absolutely revolutionary. Let me put it like this. Suppose the British Government decided that it would bring great financial benefits to the United Kingdom to give the City of London special status and exempt it from the law of the land. Whatever the financial logic, one can imagine the howls of outrage from outside London and the rest of Britain. In the same way one must suppose that the adoption of the two systems policy potentially has cause for embarrassment for the Beijing Government elsewhere in China.

It is for that reason that I am uneasy about the barrage of complaints which we have seen from some quarters and particularly in the press that Hong Kong's autonomy as at present defined in the first draft of the Basic Law is not total. I believe that there is—not in the perfect world but in the real world—one main criterion against which the Basic Law and its related constitutional arrangements must be judged: is it of a nature which allows the people of Hong Kong to prosper and at the same time is capable of being stomached by China because it does not cause too many problems elsewhere in China?

Beijing governments will change, as do governments in London. Successive Chinese governments, not just the Ministers who happen to be in power in 1997, must be able to perceive readily that the economic advantages of Hong Kong outweigh for them the doctrinal and domestic political disadvantages of its special status. If pre-1997 we try to make the Hong Kong political system too alien to Chinese ways, we could just tip the balance of the argument from the Chinese point of view and live to regret it 10, 20 or 30 years after 1997.

Having said that, I fully recognise that we have a duty to do all that we can to lend confidence to the people of Hong Kong by ensuring that the joint declaration is applied in toto. It is for Hong Kong an undoubted safeguard that China cannot be seen without great harm to herself internationally to renege on the joint declaration. Both Her Majesty's Government and the British Parliament must be vigilant during the consultation period to ensure that nothing in the Basic Law as it eventually emerges is inconsistent with the joint declaration.

The first draft is not in all respects what we should like to see. Noble Lords who have spoken—I do not intend to follow them in discussing the details—have mentioned many of the points on which further negotiation is necessary. I for my part pay tribute to the work the Government are doing to ensure that the apprehensions of the people of Hong Kong are taken into account. Beyond that, however, beyond making sure that no part of the joint declaration is departed from, it is not for us but for the people of Hong Kong to give their views on which alternative detailed provisions they prefer inside the general framework of the joint declaration.

I hope people will realise that on the ground conditions dictate that good faith on both sides may be more important than every single textual nicety. We should not get so carried away with a sense of the superiority of our own system that we sacrifice the people of Hong Kong to our theories. Let us remember that all parties have problems and that all parties are negotiating in good faith to find a reasonable solution. Better, my Lords, three-quarters of a cake than none at all.

12.50 p.m.

Lord Tanlaw

My Lords, I am very pleased to follow the noble Lord, Lord Derwent. I have listened with interest to his contribution, which was based on his valuable experience in the business world. In what I hope will be a brief intervention this afternoon I wish also to emphasise that side of this topic.

I should like to declare an interest in that I am proud to have originated from a Scottish trading family which has operated in the South China Seas for more than 150 years. My wife is Chinese and has the ability to speak at least six dialects, so I have through her the ability to listen to what people say and I get some idea of the thinking of the people of the area during the many visits that I make to Hong Kong from time to time. I am also an outside director of Inchcape and Company plc which employs, through one of its subsidiaries, more than 5,000 Hong Kong citizens. That company has every intention of remaining and trading in Hong Kong and the new special administrative region beyond 1997 and for the next 150 years if necessary, provided that the business is there. I see nothing of substance in the draft Basic Law before us which would prevent Inchcape Pacific or any other company from taking that same view.

In the preamble to the draft Basic Law it is stated that although Hong Kong has been part of China since ancient times, it was occupied by Britain in 1840 after the Opium War. Only 150 years ago it was a barren rock and a haven for seagulls and itinerant fishermen. Today it is the world's third largest financial centre and, as the noble Baroness, Lady Young, said, it is now the world's biggest container port.

It was the financiers, businessmen and traders from all sections of the community—not politicians or constitutional lawyers—who brought about the amazing transformation over the last century. The business community of Hong Kong evolved mainly from ordinary people, most of whom had fled from oppression with nothing but the clothes in which they stood up. Those new arrivals were prepared not only to work hard but to create the term "work ethic" based on self-help, for which the citizens of Hong Kong are now rightly famous. I have seen nothing in either the joint declaration or the draft Basic Law which indicates a need for those same refugees to repack their bags in order to seek fame and fortune as second-class citizens, more often than not in second-rate jobs, outside Hong Kong. In fact, I see quite the reverse.

Due to accelerated economic growth in the region and in Hong Kong especially there is an increasing shortage of middle management in both the executive and in commerce which cannot continue to be filled for much longer by expatriate staff. Those who carry the false insurance of dual nationality or residence may not be asked to fill that gap because at the first major hiccough of the Hang Seng index—and there will be one—it will be assumed that they will take advantage of their new residence abroad. Therefore I wonder whether the Minister agrees that perhaps for the first time there is a real opportunity for qualified local management who speak at least one Chinese language—those who do not have any other nationality and who are prepared to stay on after 1997—to get to the top in the SAR.

The noble Lord, Lord Cledwyn of Penrhos, raised the question of the worries of emigration, as did other noble Lords. I am not particularly worried about emigration and I do not think one ought to be. It can easily be stopped, and quite simply in my personal view, if the executive and indeed commercial companies make quite clear that they are not happy with people who have dual nationality continuing to go up the ladder, that their places will not be guaranteed and that they would much prefer to employ those local citizens who do not, cannot or have no wish to take up dual nationality and are prepared to throw in their lot with the future of Hong Kong and the SAR. If that were made quite clear I feel sure that emigration would certainly slow down if not stop altogether. I know of no other place in the world where people wish more strongly to get up that ladder and rise to the top. We should start to make some rules about this situation which would allow companies and the executive to create a management structure that will last beyond 1997.

If there is to be continued growth in the economy after 1997—and Chapter V of the draft Basic Law makes that assumption—businessmen and traders must be given conditions, which are the same conditions as now, in which they can flourish. All governments should have that objective and the Hong Kong Special Administrative Region should be no exception. If that objective is not achieved because business cannot operate efficiently owing to, for instance, excessive bureaucracy, corruption or organised crime, then Basic Law will become quite inoperable.

I wonder whether the noble Lord would be prepared to say that it is the intention of the SAR to protect business interests from those hazards as far as possible through the continuation of an authoritarian type of rule, as was previously conducted under Britain, but with the leavening of consensus democracy through the 25 per cent. proportion of direct elections as set out in the draft Basic Law, and that universal suffrage will be deferred for a long time to come.

Basic Law must be seen only in the context of Hong Kong. Other noble Lords have made that same observation and there is no point in my elaborating it further. However, it must also be recognised that the people of Hong Kong have special conditions and different social and cultural backgrounds which perhaps do not apply elsewhere.

In the debate on Hong Kong in another place on 20th January 1988, as reported at col. 1009 of the Official Report, a spokesman from the opposition party, Mr. Andrew Faulds, underlined that point. He said: Most of us forget … that China and Chinese people everywhere have totally different cultural and social traditions from ours. The concept of democracy is at variance with their political thought over the many centuries of Chinese life. China, both Confucian and Communist has shown a long respect for authority and social order". He said, if I may paraphrase him slightly, that this was perhaps something that we in the individualistic West have been committed to for far too long to understand or to accept.

The people of Hong Kong do not have a Graeco-Roman cultural background as do the Western democracies, yet in my view Hong Kong is in every sense a city state of the kind envisaged by ancient Greek political thinkers. I cannot resist quoting a poet of that period, named Phoclydes, who was an advocate of the good life in the city state. In the sixth century BC he wrote: Better a tiny and orderly city set high upon a rock than the senseless disorder of Nineveh". Although that was written a very long time ago I believe that those words sum up the average Hong Kong businessman's philosophy for the future. Hong Kong has seen the apparent "disorder of Nineveh" take place across the border in mainland China. The Chinese people experienced it during the cultural revolution, which I think was the ultimate experiment in democracy. In my view neither government would wish it to be repeated. Therefore the objectives of both sets of authors of the draft Basic Law appear to me to be the outcome of one mind on the subject of democratic representation.

Yet of course there are objectors to consensus democracy, such as Mr. Martin Lee and his friends who, although they have assumed the role of the Socratic gadfly, in my view have failed to produce for Hong Kong the convincing Socratic argument for a full democracy which would not endanger the prosperity of the entire economy.

The SAR will be an international economy. It can do without undue influence of local politics and local politicians, who are unlikely to make a contribution to its growth. A thriving middle-class of professional business managers on the other hand will, in my view, create a positive and stabilising influence for government for the future; and that applies to any government, whether or not it is the Government of Hong Kong. I am sure that noble Lords do not wish me to quote Aristotle and the Golden Mean or any other philosophers of that period who believed in that same doctrine.

However, there is one other point that I should like to raise. If Aristotle is a little far back in history, I should like instead to quote Mr. Hilton CheongLeem of the Legislative Council, from the contribution that he made to the debate some time ago about representation and the various timings involved. In my view he is one of the wiser counsels of Hong Kong. He came to the conclusion: My assessment therefore … is that there is no overwhelming majority among the population in general for direct elections to be introduced in 1988". I believe that the reason in brief—and I shall say it quite bluntly—is that full democracy in Hong Kong at this time is simply bad for business; and I do not mind saying so. We have to accept that. That is the view put forward to me and to many others who go to Hong Kong. Often it is awkward to say so in a democracy such as ours. I have said that things are different in Hong Kong. We have to recognise that, and we should do so quite soon.

I shall not take up more time, except perhaps to underline the worries that have already been expressed. First, on refugees, the history of Hong Kong has been founded on the refugees escaping oppression and being allowed to ascend the ladder of prosperity. There has been one exception in that matter. It is the boat people, the Vietnamese refugees, and their present position. This must be brought to a conclusion one way or the other. If they are to make a contribution, as the noble Baroness said, they should be allowed to do so as all others have done in Hong Kong, and be given a chance to make their future. Such people who can be described only as bad hats—one can have them anywhere—can perhaps be treated differently. But, generally speaking, the majority could make a good contribution to the future of Hong Kong.

One other area has not been touched upon. It is the possibility that in what might be an interregnum, or a period of hesitation by executives of the new government of the SAR, organised crime might take this opportunity to establish further power and inroads into the infrastructure of Hong Kong. This is outside the terms of this debate. However, all I shall say is that concerning the tarnished crown of organised crime the unattainable jewel has been Hong Kong. It will require the determination of all those responsible after 1997 to maintain the record of integrity sustained by colonial government.

I wish to sum up by saying that if business fails to continue to grow at present levels in Hong Kong after 1997 for whatever reason, Basic Law in my view will become an irrelevance. The economy of Hong Kong is unsustainable on its own. Therefore the island can always return to being a colony again, a colony fit only for the sea birds, whose ancestors were Hong Kong's original settlers prior to 150 years ago.

1.2 p.m.

Lord Geddes

my Lords, one of the great advantages of batting number nine in your Lordships' House, in particular at two minutes past one on a Friday afternoon, is that most of what one had down to say has been said. The other advantage from your Lordships' viewpoint is that the ninth batsman does not normally last very long. I shall try to keep roughly to that timescale.

I wish to give an overview of one or two points that noble Lords have already mentioned, and one which has not been mentioned. It will not surprise some of those present. It is the question of passports. I wish to raise the question of passports, the issue of dual nationality and freedom of emigration.

Article 30 on page 39 of the draft Basic Law states: Hong Kong residents shall have … the freedom of emigration to other countries and regions". However, in December last year the Director of the Foreign Ministry's Hong Kong and Macau Affairs Office was quoted as saying that China was aware of the need of many Hong Kong people to hold foreign passports. However, it was illegal to hold dual nationality in China and therefore a change in Chinese law would be necessary. There is certainly no guarantee that such a change would be made. Indeed, there is no indication that it is even contemplated. My noble friend Lord Glenarthur has probably anticipated that I shall bring up this problem. I hope very much that he will give us some comments on that.

In December last year, Mr. Tam Yiu-chung, a Basic Law drafter, was quoted as saying: It is logical that the future Beijing government will, through administrative rule, ban a person holding two passports". That particular comment seems to run counter to the 1984 Chinese memorandum in the joint declaration. That memorandum stated that taking account of the historical background of Hong Kong, and so on, the People's Republic of China will with effect from 1st July 1997 permit Chinese nationals in Hong Kong who were previously called British Dependent Territories Citizens to use travel documents issued by the Government of the United Kingdom. I shall not bore your Lordships by quoting any further. Generally, the effect of these statements must make the promise of freedom of emigration look perhaps a limited and qualified freedom. The draft Basic Law seems to have ducked the specific issue of dual nationality. This cannot be in the interests of the Hong Kong people.

Before I leave the question of passports, perhaps I may ask my noble friend this question. From the example that I quoted from the joint declaration, I noticed only this morning that there is specific reference to persons who were British Dependent Territories Citizens. As your Lordships will be fully aware, a large number of those will either have converted, or may convert, to full British National Overseas status. Can we assume that the undertaking given by the People's Republic of China regarding the BDTCs will still apply to BNOs? It is a rather technical point but I should like my noble friend to answer it if he can.

The second subject that I should like to raise concerns the problem of refugees from Vietnam. A great deal has been said on this subject by noble Lords in this debate. I do not intend to rehearse the arguments. I too find it an urgent problem of horrifying magnitude. The statistics tend to vary slightly, but whatever the statistics are they are appalling from Hong Kong's point of view. This is surely a problem with which Hong Kong can no longer be expected to deal in the way that it has done in the past. It appears that these refugees are now much more an economic than political problem. The rest of the world, including your Lordships' House, must assist. A definite timetable for implementation of changes to the first asylum policy must surely be agreed without further delay.

My third point in summing up is on autonomy. Members of your Lordships' House who have already spoken are a great deal more expert on this subject than I. However, this concerns me as a lover of Hong Kong, and with a certain knowledge of that quite excellent place. Perhaps I may give one or two specific instances. The first refers to the election of the first chief executive. It has been debated in several quarters since the draft Basic Law was published. As I read it, it seems that the relevant paragraphs of the draft Basic Law do not seem to comply with the spirit of the joint declaration. The first part of paragraph 3(2) has been quoted today already. It continues: The Hong Kong Special Administrative Region will enjoy a high degree of autonomy". It continues in Annex I, pages 14 and 15, to say: The Chief Executive of the Hong Kong SAR shall be selected by election or through consultations held locally and be appointed by the Central People's Government". However, on page 87, Annex III of the draft Basic Law, it states that the election of the first chief executive is to be by recommendation from an election committee, which committee is established by a preparatory committee—and the preparatory committee is appointed by the National People's Congress. There seems to be there a slight discrepancy.

Many noble Lords have mentioned Article 169. I wish to go a little further than that. More important is that the laws of the Hong Kong SAR, and the joint declaration, as they presently stand, do not seem to match. As we know, the Hong Kong SAR will be vested with executive, legislative and independent judicial power, including that of final adjudication. The laws currently in force in Hong Kong will remain basically unchanged.

Paragraph 3(12) of the joint declaration, the summing up paragraph, states: The above-stated basic policies of the People's Republic of China regarding Hong Kong and the elaboration of them in Annexe 2 to this joint declaration will be stipulated in the Basic Law of Hong Kong SAR". I should like to turn to Article 169, which has already been widely mentioned, and Articles 170 and 172 of the draft Basic Law. I shall quote selected extracts. As we have already heard, Article 169 states: The power of interpretation of this law is vested in the Standing Committee of the National People's Congress. When the Standing Committee of the National People's Congress makes an interpretation of the provision in this Law, the courts of the Hong Kong Special Administrative Region, in applying that provision, shall follow the interpretation of the Standing Committee". Article 170 states: The power of amendment of the Law is vested in the National People's Congress". Article 172 states: At the time of the establishment of the Hong Kong Special Administrative Region, the laws previously in force in Hong Kong shall be adopted as laws of the Region except for those which the Standing Committee of the National People's Congress declares to be in contravention of this Law. If any laws are later discovered to be in contravention of this Law, they can be annulled or revised according to the procedure as described by this Law". I shall cut short the rest of my comments on that subject. I am concerned that there appears to be in the first draft quite significant conflict between the spirit of the joint declaration, and on occasions the words of the joint declaration, and the first draft of the Basic Law.

I should now like to use a word which I have used many times in your Lordships' House in this context. The noble Lord, Lord Cledwyn of Penrhos, also used it. It is the word "confidence". I am not that proud to say that I spoke in your Lordships' House in May, 1984, on exactly this subject and on what the lack of confidence would do as regards emigration from Hong Kong. Many words have been said on that subject and I do not wish to repeat them. I believe that, despite the fact that your Lordships may become tired of a well-worn gramophone record—perhaps I should call it a "disc"—nevertheless, if the tune is good (which I in turn interpret as right) it is well worth playing again. In debates in this House my tune has consistently been entitled "Confidence in Hong Kong". To keep that record playing in an unscratched state the serious discrepancies between the draft Basic Law and the joint declaration need to be looked at thoroughly and resolved before it arrives at its final state.

I warmly endorse the remarks made by the noble Lord, Lord Maclehose, about the tremendous job which is being done by Sir David Wilson and his colleagues. Surely all Members of your Lordships' House will give them and the people of Hong Kong their support.

1.14 p.m.

Lord McGregor of Durris

My Lords, from the point of view of the quality of life in Hong Kong after 1997, the implementation of paragraph 13 of the joint declaration is of central importance. The paragraph declares that the Hong Kong Special Administrative Region Government: shall protect the rights and freedoms of the inhabitants and other persons in the Hong Kong Special Administrative Region according to law … the Government shall maintain the rights and freedoms as provided for by the laws previously in force in Hong Kong, including freedom of person, of speech, of the press, of assembly, of association …". and many other rights besides. The declaration provides that the legislature of the special administrative region shall be constituted by elections.

Freedom of the press is as fundamental to the maintenance and enjoyment of the freedoms listed in paragraph 13 as it is to the conduct of' present negotiations as well as of elections, whatever form they may take. They will be a charade unless the well-informed electorate can make responsible judgments. They will depend on an assured flow of accurate information and a variety of critical commentaries upon the policies and activities of all the governments involved and on their concentrations of power.

The Hong Kong Government caused great anxiety in the democratic world when in March last year they adopted a new section (Section 27) of the Public Order Ordinance. That provides: (1) any person who publishes false news which is likely to cause alarm to the public, or a section thereof, or disturbs public order shall be guilty of an offence and shall be liable … on conviction on indictment to a fine of $100,000 and imprisonment for two years; and … on summary conviction, to a fine of $30,000 and to imprisonment for six months.". That highly restrictive and ambiguous power to prosecute the media under a criminal law is a very serious threat to freedom of expression. Of course it: is possible for anyone charged under the section to offer a defence of having reasonable grounds for believing that the news to which the charge relates was true. But of course such a defence would violate the very basis upon which journalists work; namely, by requiring them to divulge the source of their information.

Oddly enough, this new legislation was introduced at a time when the Hong Kong Government repealed a wide range of repressive legislation. They insisted that their new powers would be used only in rare circumstances arising from the unique position of Hong Kong. It is a small area with a large population concentrated in that area of land and hence it is vulnerable to social and economic instabilities resulting from the spread of malicious rumours. Moreover, it was said that the law would be invoked only under stringent guidelines to be laid down by the Attorney-General.

That explanation did not give confidence to the local press or satisfy it because the press knows perfectly well that all governments will harass and censor the press and that all governments which harass and censor the press—from South Africa to Singapore—justify their policies by reference to the unique circumstances of their own countries.

This development resulted in many protests from Commonwealth countries and from the Commonwealth Press Union. I was invited to join a small delegation under the leadership of Mr. Leonard Marks from the World Press Freedom Committee in Washington. It went to Hong Kong a year ago to urge the repeal of Section 27. For me that was one of four recent visits to the media in Hong Kong. We urged upon officials—the Attorney-General and the Governor—that that section violates Article 19 of the Universal Declaration of' Human Rights. We argued further that the implications of the section run far wider than the domestic affairs of Hong Kong.

Hong Kong's long-standing tradition of a free press has been regarded as a model for Asia for the last generation. That is especially significant at a time when the existence of the free press is being destroyed in such countries as Singapore, Malaysia and Indonesia. The delegation expressed the view that the repeal of this legislation would be very helpful in restoring the standing of Hong Kong as a country protecting free expression.

Finally, and this was the delegation's most important point, there is concern lest the very wide section should become a means of enabling the Chinese Government to legitimise their control over the press of Hong Kong in 1997. It is essential that we do not neglect the present and future role of the Hong Kong press when taking what the noble Lord, Lord Cledwyn, described as an interim look at a developing situation. As my noble friend Lord Kennet has emphasised, we must seek liberties as broad as we can obtain from Peking. Among these liberties, that of the press is crucial and I am sure that your Lordships will have noted the limitations of the draft Basic Law in this as in other respects which were outlined by the noble Lord, Lord Irvine of Lairg.

The delegation to which I have referred was treated with great courtesy and understanding by everyone it met in Hong Kong and was encouraged by the constructive attitude of the officials and by their willingness to consider seriously the consequences of these restrictions for the press. The delegation was assured that the legislation would be monitored and that the issue would be re-examiend if it appeared that the anxieties expressed were justified. The delegation had met leading journalists in Hong Kong working on local and international publications and they all pointed to "the chilling effect"—and that was their own phrase—on their coverage of news events. They said that an atmosphere of self censorship, incompatible with a free and responsible press, had already been created and was in particular affecting the reporting of the attitude and policy of the Chinese Government towards the implementation of the joint declaration; that is to say, officials undertook to examine the effects of such self-censorship in any review which was undertaken.

Therefore, I was not surprised to read in the Hong Kong Sunday Morning Post on 24th April of this year a report, described as being from "a source", that senior government officials desire to delete the section altogether. Sir David Ford, the Chief Secretary, was reported as saying that a monitoring committee of councillors, civil servants and journalists would be set up and that a review would take place before the end of this year. It will be good for the implementation of' the joint declaration if this review leads to the repeal of the unfortunate Section 27 and perhaps the Minister may feel able to encourage this hope.

1.25 p.m.

Viscount Torrington

My Lords, as your Lordships have already heard, I have, in company with two noble Baronesses, Lady Young, and Lady Ewart-Biggs, just had the privilege of visiting Hong Kong, which is what I can only describe as the most vibrant and successful modern city state in the world. I find the analogy of the noble Lord, Lord Tanlaw, particularly apt. Indeed, I only returned from Hong Kong yesterday and I should like to echo the words of thanks expressed by my noble friend Lady Young to the Hong Kong Government for all the facilities which they provided to us and for the opportunity to talk to people of all shades of opinion.

I believe that Hong Kong's success comes from a combination of several important factors, chief among which are obviously its position on the edge of China, its "hands off" rule by a benign and virtually incorruptible colonial administration and, above all, the immense energy and vitality of its people. There at the mouth of the Pearl River sits a city which rivals New York, London or Tokyo, where the inhabitants never seem to sleep, where the streets are free from litter, where mugging is relatively rare and where for nine more years the Union Jack will flutter.

However, as my noble friend Lady Young implied, among the visible signs of success run currents of deep foreboding. Hong Kong is quietly bleeding, in spite of what the noble Lord, Lord Tanlaw, said. The outward flow of talent is more than a trickle but as yet is less than a flood as hundreds of middle-management and professional people emigrate to Australia and Canada. Perhaps 50,000 will do so this year, denuding industry and commerce of vital skills. Industry and commerce—business—is the very life blood of Hong Kong.

The worries can be summed up as a number—1997. What those four digits mean underneath it all is a sort of disillusionment with Britain and a fear of China. Why is there disillusionment with Britain? I shall not dwell on the background to the Sino-British joint declaration. The fortification of Hong Kong Island and Kowloon to Boundary Street and the abandonment of the New Territories with their 3 million population was never a serious option, nor was the idea of doing nothing in the hope that life could just go on. I, for one, cannot believe that China would espouse the socialist concept that a sitting tenant, in this case Britain, should have security of tenure beyond the expiry of its lease. What really rankles with the people of Hong Kong is the feeling, rightly or wrongly, that Britain sees its future relationship with China as more important than the fate of Hong Kong. Add to this the feeling that the BNO passport will be a stateless person's document by another name and the bitter cocktail is complete.

Why is there a fear of China? We all know that the world is changing fast. Old-fashioned totalitarian Marxist communism seems today to be in retreat on all fronts and China is a very different country from what it was 10 years ago. Cross the border at Lo Wu to Sum Chun City and you scarcely realise that you have left Hong Kong. Super-highways, new factories, office blocks and hotels with revolving restaurants festoon the landscape giving the appearance, but not quite the substance of Hong Kong.

For all the "four modernisations" China is not Hong Kong but a land where political reversals have flowed as regularly as the tide, where long marches have been followed by retreats into isolation, where the blossoming of a hundred flowers has been expunged by the herbicide of the cultural revolution. China today looks to be a land of opportunity for its millions and for the businessmen and the people of Hong Kong but it is not a state with democratic traditions or with non-political administration of justice. It has no history which suggests that it can smoothly assume the role played by Britain in the affairs of Hong Kong. We all hope that it can do so and wish it well.

However, Hong Kong itself is, sadly, not a democracy in the accepted sense of the word albeit that its people are free. Its people can only vote one way as the noble Baroness, Lady Young said—namely, with their feet, enriching the old Commonwealth countries at the expense of Hong Kong and, ultimately, China. Britain and China now have a common interest to stop that process but with the carrot rather than the stick.

The draft Basic Law—that document described by some as not bad for a first attempt—falls on closer inspection somewhat short of the principles of the joint declaration in many important respects, and many noble Lord have already pointed to those deficiences. Britain's last great colonial duty is to ensure that the final Basic Law does not so fall short. China, by contrast, has the opportunity to gain the respect of Hong Kong by making the Basic Law perhaps even more favourable to Hong Kong than the joint declaration. It will gain, not lose face by so doing.

I shall not go into too many examples of what I consider deficiencies in the Basic Law. Indeed, I agree with the noble Lord, Lord MacLehose, that there are many good points in the Basic Law, but I find it to be a woolly document. American lawyers often use the expression "gross negligence" in legal documents. English law, however, does not recognise degrees—the defendant is either negligent or he is not negligent. Hong Kong must either be autonomous or not autonomous—"highly autonomous" is merely a relative term which can be interpreted by any judge in whatever way he feels best. Let Hong Kong be autonomous, subject only to clearly defined exceptions in the fields of defence and foreign affairs.

Of course, the Basic Law must give effect to the independence of the judiciary. After 1997, as currently envisaged under Article 169, the body which will ultimately interpret the Basic Law will be the National People's Congress—an avowedly political body. Is it perhaps too much to suggest to China that as an alternative it might use the next nine years to establish its own independent judical body on which, if it is ultimately to interpret Hong Kong's constitution, its Basic Law, Hong Kong itself should be represented from 1997?

In referring to constitutions, I have, in common with many other noble Lords who have spoken, one great sadness; that is, that as Britain moves to return the sovereignty of Hong Kong to China it cannot hand with it a shining example of representative democracy. The economic sophistication of Hong Kong is not matched—at least technically—in the political sphere. Yes, the government is efficient, open and benign, but it is not truly democratic.

I have listened to the many arguments for and against an indecent rush for full pre-1997 democracy. The arguments on both sides seem seductive. On balance, the cries and shouts from both sides suggest to me that the pace more or less as envisaged in the White Paper, though not ideal, is about right. A headlong rush would add yet one more uncertainty and push business confidence down the same slope as personal confidence, as evidenced by the brain drain. I have no doubt that my remarks will be a disappointment to Mr. Martin Lee, who I thought I saw below the Bar.

An immediate election by universal suffrage would require instant political parties in a hitherto unpoliticised country. Votes would probably have to group under instantly recognisable labels and to most Chinese there have only ever been two such labels Communist and Kuomintang. Both are totally inappropriate to modern Hong Kong. Neither is likely to inspire stability or confidence.

I agree with the noble Lord, Lord Derwent, that whatever the Basic Law finally says, it will only be a piece of paper; and it will only work if China, Hong Kong and Britain are determined to make it work. The next nine years must be used to regain the confidence of the people of Hong Kong. Only in that way will stability and prosperity be maintained.

In conclusion, to the Chinese government in Peking I would respectfully say, Yao you zi zhu quan bi xu xian jian li zin lai"— that is, of course, a transliteration from the Mandarin: the English would be: To have true sovereignty one must gain the trust of the people".

1.34 p.m.

Lord Chalfont

My Lords, I apologise to the noble Baroness who is to speak next for intervening at such short notice. I do so briefly and for one reason, which is this. In the debate so far there has been no shortage of remarks and comments on the deficiencies of the draft Basic Law document. It is therefore right that someone at least should say that it is also in many ways a remarkable document considering the problems.

Here we have a document which contains the beginnings, the seeds, of a detailed constitution, arrived at by open discussion and containing a number of options. It is submitted for a five-month consultation period, to be returned to the drafting committee, and to come back for further consultation. It seems to me right to say that when one considers that only a short while ago the People's Republic of China was passing through an agonising cultural revolution, this is indeed a remarkable achievement at this stage. In my view, it displays on the part of the Government of the People's Republic of China an admirably flexible attitude towards the emergence of what will be the final Basic Law.

Of course, it is understandable that there are doubts in Hong Kong. Like other Members of your Lordships' House, I have recently returned from Hong Kong where I have been a frequent visitor, as I have to the People's Republic of China over the past 15 years. It would be foolish to deny that there are doubts and fears among some of the people of Hong Kong. My impression was that among the ordinary people of Hong Kong the main concern is an unformed but very real fear that the quality of life in respect of human rights might suffer after 1997. Among those more closely involved with the detail of these matters it seemed to me that the main fears in the Basic Law concerned Annexes 1, 2 and 3, which deal with the election or selection of the chief executive, the legislature and the government.

It is right to point out at this stage that there is no conflict between those annexes and the joint declaration. They will, of course, need refining, discussion and a great deal of concession by the People's Republic of China in the face of the just aspirations of the people of Hong Kong. However, in that context the noble Lord, Lord Cledwyn of Penrhos, in his thoughtful opening speech, mentioned that the joint declaration called for a high degree of autonomy for Hong Kong. With respect, I should say that to call for a high degree of autonomy is like calling for a long piece of string—how long? How high a degree of autonomy? That is what will be at the root of the debate which will take place over the coming months.

There will be those who will be pushing one way and those who will be pushing the other way. There will be a wide divergence of views which will have to be resolved between now and the promulgation of the Basic Law.

I conclude by saying that what is needed now is a serious debate in Hong Kong and elsewhere about the Basic Law and the need to bring it further into a consistent position with the joint declaration. Something has been said about the desire in Hong Kong for a move towards direct elections in advance of the 1997 hand-over. As other noble Lords have said, that is a complicated issue and it would not be for me to attempt to deliver any judgment upon it.

I say only this. I have some sympathy with the British Government if they believe, as they are reported to believe, that any unilateral move of that kind in the meantime might well offend and outrage the People's Republic of China—the government in Beijing. That is not, however, to say that we should not be extremely vigilant about the way in which the debate and the discussion is conducted in the coming months of consultation.

It would be quite wrong, as has been suggested, to suppose that if we take a strong line in support of the legitimate aspirations of Hong Kong people we shall cause offence in Peking. We shall not. The Chinese are an intelligent people. Above all, they are tough, hard negotiators and they understand tough, hard negotiations. In these coming months let us have no doubt that they will look after themselves. They know how to look after their own interests and I believe it is for us, as the Government who still carry the responsibility for Hong Kong, to ensure that in the coming months it is not only the people of Hong Kong who must look after their interests but we as well.

I hope that Her Majesty's Government will play a full part in ensuring, as other noble Lords have suggested, that in the long run, when the draft Basic Law, which is only a consultation document, finally emerges as the Basic Law for Hong Kong after 1997, it is as indistinguishable from the joint declaration as it is possible to make it. Nevertheless, I believe that we should not underestimate the political sacrifices and the high degree of flexibility in Peking which has led to what I consider to be a very promising consultative document.

1.40 p.m.

Baroness Ewart-Biggs

My Lords, my noble friend Lord Cledwyn opened the debate with a very full and comprehensive introduction. He put some searching questions to the Minister and I very much look forward to hearing his replies. There have also been some valuable and well-informed contributions from other Members of your Lordships' House. I hope that the friends whom I recognise listening to the debate today will be pleased that the subject has been gone into so fully, and that when this debate is recorded on BBC Hong Kong they, too, will realise the very great seriousness with which the subject has been taken.

As my noble friend said, I had the good fortune to go to Hong Kong last week on a visit initiated by the Hong Kong Government. I wish to say how grateful I am for all the care and attention and for the very careful programme that we were given while we were there, and how happy we were made to feel. The noble Baroness, Lady Young, and the noble Viscount, Lord Torrington, and I very much welcome the opportunity presented by this debate to describe to your Lordships what we saw. The noble Baroness, Lady Young, said that anyone visiting the colony could not fail to be enormously impressed by the way in which Hong Kong works. There is the great energy and the dynamism of the people, and in effect an economic miracle has been brought about.

Besides that, one is reassured to see the remarkable strides made as regards the housing needs of Hong Kong. For example, the vast construction programme in the New Territories has made such an enormous difference to the housing needs of the people of Hong Kong. More than half the population are now accommodated in adequate public sector housing. There is a thriving community of nearly 6 million people with the blessing of full employment and who have enjoyed political and economic liberty under British rule. As the noble Viscount, Lord Torrington, said, there can be little doubt that those freedoms are at the heart of their economic success.

One also recognises the paradoxical situation which exists at present where, on the one side, there is tangible proof of confidence reflected by the booming economy, high investment, massive construction work, and on the other, there are visible signs of panic represented by a steady drift away to Canada, the United States of America and Australia of the most valuable members of Hong Kong's middle management and high-level members of financial and business circles. To restore confidence sufficiently to stem that flow before it becomes a torrent must be the major preoccupation for Britain and the Hong Kong Government in the coming months.

Previous speakers have described the events of recent years and the initial incredulity that Britain was, in effect, transferring power to China in 1997. After that came relief at the satisfactory terms and the necessary safeguards contained in the joint declaration. In turn this was replaced by mistrust of the draft Basic Law which is now under intense scrutiny in Beijing and Hong Kong. As my noble friend said, that is central to our debate today and it is the very kernel of the whole situation in Hong Kong.

My noble friend and other noble Lords have gone deeply into the complexities and weaknesses of the document. I wish to add one or two general points to what has already been said. It must be recognised that never before has there been a situation whereby the writing of a constitution, which is what the Basic Law will become, is being conducted in the open accompanied by full consultation with the entire people through the Basic Law Consultative Committee. Therefore, Beijing can certainly not be accused of secrecy and conspiracy.

What are the reasons why Beijing wants so much to get it right and to make the transition period work? I believe that the noble Baroness, Lady Young, described these. They are mainly that Hong Kong presents a very big market which brings in 30 per cent. to 40 per cent. of China's foreign currency. The majority of foreign investment into China comes from Hong Kong. Trade between the two is in China's favour. China has many companies in Hong Kong and at present it benefits from a great amount in remittances coming each year from 20 million Hong Kong people who go to see their relatives in China.

China is keen on a policy of reunification and believes that if the reunification with Hong Kong can be made to work, then Taiwan may well follow suit. Here it is worth noting the evidence that Chinese communities work hard and successfully everywhere at present except in China. This situation must have been perceived in Beijing; so it is possible that the NPC might wish to establish a whole series of small, Hong Kong-style financial centres in China in the hope that they will work as well there as they have done in Hong Kong.

What are the other major criticisms about the draft Basic Law coming from the people of Hong Kong? These have been gone into, but it is most important to recognise that though some parts of the joint declaration have been transposed to the draft Basic Law, there are others that are in direct conflict or which do not reflect accurately the provisions of the joint declaration.

As the noble Baroness, Lady Young, and others said, the principle of one country and two systems has not been realised. Sovereignty has been emphasised to the detriment of the high degree of autonomy promised to the SAR in the joint declaration. The definition of high autonomy is difficult, and the concept of one country and two systems is sure to run into trouble when the two different systems come together, touch and clash. It is seen there that one cannot get away with the one country aspect. One must remember that the bottom line is Chinese sovereignty and that the Basic Law is part of the Chinese constitution. It is vital to find ways of mitigating the bad effects of any clash by the establishment of an arbitration committee which would be consulted when there is a divergence over the interpretation of the Basic Law.

My noble friend Lord Irvine spoke of this concern with all the authority that he has. He also spoke about Article 39 of the Basic Law which could allow the SAR legislators to enact laws to restrict basic human rights beyond the limits permitted by the two international covenants on human rights. He made some very valuable suggestions about how this may be rectified.

There is an animated discussion taking place in Hong Kong, as previous speakers said, about the future electoral system. There is a strongly articulated voice coming from a radical, intellectual group that is asking for direct elections, saying that the future leaders of Hong Kong would be much strengthened by having been given a mandate from the people. I do not believe anyone could contradict them. My noble friend Lord Cledwyn has described in some detail what the group is saying and that it would be very unwise to ignore the significance of its feelings, although I noticed that the noble Lord, Lord Tanlaw, did not agree very much with what it thought.

Another shade of opinion would like to see a grand electoral college made up of 600 people chosen from different sections of the community. They would elect the chief executive and a quarter of the legislature. It is believed that this would be a compromise between the democratic system used in Britain and the system used in China. It is argued with logic that if for so many years Britain did not allow the democratic process to be used in Hong Kong, why should it be introduced just prior to departure. The group argues against direct elections because it says that the party political system that would emanate from direct elections would bring with it the presence of a Communist Party and a party representing Taiwan's interest.

This is what the noble Lord, Lord MacLehose, meant when he said that direct elections might increase Chinese interference in Hong Kong through the participation of a Chinese political party in the legislature. My view is that a larger proportion of directly elected members of the legislature should be included in the final Basic Law, and that there should be a movement towards universal suffrage as soon as possible.

It is clear that the discussion will continue to rage during the two consultative periods that are still ahead of us. However, what stands out in my view is that the role of the chief executive is all-important, and that he will need to have credibility and support in Hong Kong. Equally important is the fact that the relationship between the executive and the legislature should be based on a system which provides for both checks and balances as well as co-operation. I agree with what the noble Lord, Lord MacLehose, said about a decision on this question being made as soon as possible.

It is very much up to the people of Hong Kong to make their views known on all these important matters, and this is clearly beginning to happen. One wonders what the role and responsibility of Her Majesty's Government should be. It is to use its influence to further this discussion on the Basic Law through its negotiations with Beijing. I should like to end my remarks by pointing out two other areas in which the Government can help to resolve other problems which lie outside that process but are nevertheless a burden for Hong Kong to carry at the moment. I know that the refugee problem has already been discussed. I spoke about it in some depth with Rita Fan, who was asked to put forward a report on the matter, and we also visited a closed camp. Within what is possible, the Hong Kong authorities run the closed camps with efficiency and fairness. However, that is no solution. There are approximately 14,000 refugees, termed economic migrants—mainly ethnic Vietnamese coming from North Vietnam. I should like to hear from the Minister whether he has any further figures. I know that when we were there each day the numbers were increasing. Hong Kong pays 75 per cent. of the cost of these camps and the Save the Children Fund and the UNHCR pay the other quarter. Hong Kong has been blamed for not resettling many of the refugees. Hong Kong offers 250 places a year for resettlement but these are not taken up by the refugees because they want to go to Canada, the United States or Australia, countries with low quotas, and see Hong Kong merely as the first stage in their journey. Hong Kong is in a Catch-22 situation. Unlike other countries it is still conforming to the 1979 Geneva Agreement which proposed that anyone arriving by boat should be presumed a refugee and given asylum. But these migrants from Vietnam see Hong Kong simply as the first stage of the journey and other countries will not take them; nor will Vietnam receive them back. Other countries do not conform to the Geneva Agreement but to the United Nations one.

I have no doubt that the Government are fully aware of this problem and are engaged in finding a solution. An added urgency is that the policy towards the people of Hong Kong's own race—the Chinese—contrasts so cruelly, in that any illegal Chinese immigrants are immediately returned in handcuffs to the mainland of China while the Vietnamese are given asylum.

There is an urgent need to approach this tragic situation from different angles. An international decision is required; Hong Kong cannot take this decision itself. First, there must be a decision about the definition of a refugee. A mechanism must be developed for distinguishing bona fide refugees from non-refugees. Secondly, the UNHCR should take a lead in developing such a policy. Thirdly, there must be more pressure on the international community to persuade Vietnam to co-operate in resolving the problem. Aid arrangements to Vietnam should not be discounted. Fourthly, other countries must assist in the resettlement programme. Nearly 30 per cent. of the refugees in Hong Kong have been there for more than three years. Lastly, the Government should liaise with the Foreign Ministers of the ASEAN countries who will be meeting in July this year, to explore with them a more pragmatic approach to the problem. Something must be done to find a humane solution to this tragic affair. Hong Kong needs and deserves help and support in finding it.

Another area of concern to Hong Kong which was described to us by members of Omelco is the problem some Hong Kong visitors encounter when they arrive at ports of entry. These visitors hold the new BDTC passport. Many of them are refused entry, often it seems for a trumped-up reason and sometimes through confusion over the new passport. We were told that, out of 40,000 visitors to Hong Kong, as many as 330 encountered problems and were turned away. I am sure that something can be done to rectify this problem. It would make a great difference to the attitude towards Britain of the people of Hong Kong. It is important to remember that Britain's standing in the eyes of Hong Kong is very low. Anything we can do to re-establish confidence in the British Government is of enormous importance. It is also important to recognise the deep distrust which Hong Kong people can feel towards the country from which they came.

I am grateful to have visited Hong Kong and I look forward to a solution which will be of help to all the people of Hong Kong, especially those who will not be able to leave and therefore need a stable community in which to remain.

1.58 p.m.

The Minister of State, Foreign and Commonwealth Office (Lord Glenarthur)

My Lords, I too am grateful to the noble Lord, Lord Cledwyn of Penrhos, for giving us a further opportunity to discuss developments in Hong Kong. I must begin by assuring the House of our responsibility for Hong Kong and of the fact that its future is a matter of the highest priority for Her Majesty's Government. My right honourable and learned friend the Foreign and Commonwealth Secretary made that plain when he visited the territory only very recently.

Today's debate has underlined the continuing interest and concern for Hong Kong which is felt by your Lordships. It has also demonstrated an impressively high level of understanding and knowledge of Hong Kong's current preoccupations. As the noble Lord, Lord Cledwyn, said, some of it stems from the recent visits to the territory by some of your Lordships, which I know the Hong Kong Government greatly appreciated. Here I should like to express my admiration for the thoughtful comments made by my noble friends Lady Young and Lord Torrington and the noble Baroness, Lady Ewart-Biggs. I can assure them that their interest, and indeed all interest, in the subject is a matter of great reassurance to the people of Hong Kong.

The noble Lord's Motion draws attention to recent developments relating to the implementation of the Sino-British joint declaration on the future of Hong Kong. The debate has focused largely on the publication by China of the draft Basic Law of the Hong Kong special administration region of China. I shall do likewise. However, I propose first to touch briefly on two other aspects; namely, progress in the work of the Sino-British Joint Liaison Group and the development of the representative government. I shall also mention the recent influx to Hong Kong of large numbers of boat people from Vietnam, about whom many of your Lordships have expressed great concern; concern, I must say, which the Government fully share.

The work of the joint liaison group is proceeding steadily and smoothly. As your Lordships know, its main functions are consultation on the implementation of the joint declaration and discussion of matters relating to the smooth transfer of government in 1997. In the three years of its existence it has achieved a great deal. Much of its subject matter is undramatic, technical and perhaps even dry. However, all of it is important in giving substance to Hong Kong's future and certainty to the people of Hong Kong.

Perhaps at this point I may deal with two matters which concern the present, rather than the future. I am most grateful for the supportive comments of the noble Lord, Lord McGregor of Durris, on the review of the provisions in the Public Order Amendment Ordinance on the publication of false news that might threaten public order. I am confident that the Hong Kong Government will approach the matter in their customary positive manner and will carefully consider all comments.

I should like here to pick up one point made by the noble Baroness, Lady Ewart-Biggs, about Hong Kong British passport holders and entry refusals. We are urgently looking into incidents where Hong Kong British passport holders were refused entry. There is no question of the validity of BNO or BDT passports being in doubt, or of discrimination against holders at UK ports of entry. The holders do not require visas or entry certificates to enter the United Kingdom as visitors; but they are subject to British immigration rules.

Hong Kong was previously discussed in this Chamber on 10th February—the day on which the Hong Kong Government published their White Paper on the development of representative government in the territory. The reaction in Hong Kong was generally positive. The White Paper was widely seen as a balanced and well-judged response to the views which had been expressed by the community during an extensive exercise of public consultation. It was overwhelmingly endorsed by the legislative council. A proposed amendment regretting that direct elections were to be introduced in 1991, rather than this year, was rejected by 42 votes to seven. It is especially noteworthy that in that vote each element making up the legislative council, including those members directly elected to lower levels of government, was opposed to the amendment.

It is important that we should not forget that we have come a considerable distance over the past four years in responding to the aspirations of the people of Hong Kong for greater participation in their government. The legislation council formed in 1982 contained no elected members. All non-official members were appointed by the Governor; the joint declaration, concluded in 1984, provided that after 1997 the legislature should be constituted by elections, and the legislative council formed in 1985 introduced two categories of indirectly elected members, together making up just over 40 per cent. of the total membership. That component will be slightly strengthened in the coming autumn's elections and in 1991 10 directly elected seats will be introduced. It is already clear from the various options contained in the draft Basic Law, that after 1997 at least 25 per cent. of the legislature of the special administrative region will be directly elected.

I shall now pick up a point made by the noble Lord, Lord Cledwyn, which was also touched upon by the noble Lord, Lord Kennet. We certainly do not rule out further changes before 1997, including the possibility of directly elected seats after 1991. However, this will be assessed in the light of Hong Kong's circumstances and experience of the new arrangements in 1991, and in the light of the Basic Law which will be promulgated in 1990. Of course we must keep in mind the need to ensure continuity and a smooth transition in 1997.

Therefore it follows that I cannot agree with the comments of the noble Lord, Lord Kennet, about direct elections. We consider that this evolution, steady and gradual, constitutes an appropriate response to the wishes expressed by the people of Hong Kong. It also accommodates well the traditions of Hong Kong and its unique historical and geographical circumstances. Like my noble friend Lord Derwent and the noble Lord, Lord Tanlaw, I suggest it is by those criteria that it should be judged and not by comparison, for example, with the Westminster model.

I turn now to the draft Basic Law. I should begin by briefly rehearsing the background. The joint declaration provides that the policies of China, which it sets out, will be stipulated in a Basic Law to be promulgated by the National People's Congress of China. To this end the Chinese Government established in 1985 a Basic Law Drafting Committee, just under half of whose membership is drawn from various circles in Hong Kong. That committee in turn set up a broadly based consultative committee consisting entirely of Hong Kong people with the task of consulting all sections of the community from which they were drawn and reflecting their views to the Basic Law drafters.

Therefore I can assure the noble Lord, Lord Bonham-Carter—who, sadly, is not now in his place—that there have thus been elaborate arrangements to involve the people of Hong Kong in the drafting process. We welcome that development. As the noble Baroness, Lady Ewart-Biggs, said, the exercise has also been a most open one. The media have been kept briefed on discussion in the drafting committee and even on the progress of the draft as it has evolved. There has been a very free exchange of views within the committee.

Responsibility for the drafting and promulgation of the Basic Law, as with any other Chinese law, rests with the Central People's Government and the National People's Congress of China. But the provision of the joint declaration, to which I have referred, linking the content of the joint declaration with that of the Basic Law, gives the British Government an explicit locus standi. The noble Lord, Lord MacLehose, said, and he was right, that we are entitled to satisfy ourselves that the Basic Law fully and accurately reflects the joint declaration of which we, with the Chinese Government, are co-signatories. I assure the noble Lord that that we shall do.

The production of the first draft of the Basic Law is the outcome of considerable effort. The noble Lord, Lord Chalfont, rightly reminded us that the joint declaration itself was an international instrument without precedent. Its provisions are now to be reflected in China's domestic law, giving assurance that for 50 years a dynamic, free-trading economy will retain a high degree of autonomy within a socialist state. The imaginative concept of "one country, two systems" is thus taking legal shape.

The draft Basic Law is a long and complex instrument. Much of it reproduces word for word provisions of the joint declaration. That is obviously reassuring. For the rest, we shall continue to study it carefully and to pay close attention to comments made on the draft, especially in Hong Kong. I must stress that the Basic Law, as now drafted, is no more than an initial text. It is not yet complete. Parts of it are certainly not yet right. Chinese spokesmen also readily acknowledge that fact.

My noble friend Lady Young referred to consistency with the joint declaration. As I have said, much of the draft Basic Law reproduces, word for word, provisions of the joint declaration. Some parts of the joint declaration are in general terms. It would be possible to give effect to them in more than one way. Here, the question of consistency is much more complex. More than one assessment may be possible, as I am sure my noble friend will recognise. We do not wish to come to premature conclusions. We shall be listening carefully to all the views expressed in your Lordships' House and in Hong Kong. So, I am sure, will the Chinese authorities.

Some of your Lordships raised points of detail on specific articles of the draft. I hope that your Lordships will undertand if I do not respond in similar detail—the type of detail into which my noble friend Lord Geddes went. Some of the issues raised are highly complex. At this early stage we do not believe that it would be right to express a particular view. We wish, first, to be able to take into account the whole range of views expressed in Hong Kong and on occasions such as this debate; but the comments which have been made today will be carefully noted by Her Majesty's Government. We shall also ensure that they are brought to the attention of the Chinese Government,

Perhaps I may refer briefly, and in general terms, to some of the concerns expressed. The noble Lords, Lord Cledwyn, and Lord Irvine of Lairg, raised the question of human rights provisions in the Basic Law. We welcome the provision in Article 38 of the draft Basic Law which stipulates that the provisions of the two international covenants on human rights shall be implemented in the Hong Kong SAR. We are aware of criticisms in Hong Kong that other parts of the draft are inconsistent with Article 38.

It is by no means clear at this stage whether that is a matter of substance or drafting. We think that it should be possible to devise drafting improvements which would bring those parts into line with Article 38; but we shall continue to consider the point carefully in the light of views that have been expressed.

I turn to the judicial system and autonomy. A number of your Lordships, principally the noble Lords, Lord Bonham-Carter, Lord MacLehose and Lord Irvine of Lairg, raised points arising from Articles 16, 17, 18 and 169 of the Basic Law. Those articles relate to the relationship between the Hong Kong SAR and the Central People's Government in legislative and judicial matters. We recognise that that area is especially sensitive, where it is particularly important to get the relationship right. It is also highly complex. We are studying closely the comments which have been made here and in Hong Kong, and we shall also ensure that the Chinese authorities are fully aware of all the anxieties that have been expressed.

I noted too the concerns expressed by several noble Lords, that the high degree of autonomy which Hong Kong is to enjoy under the terms of the joint declaration should be accurately reflected in the provisions of the Basic Law.

The noble Baroness, Lady Ewart-Biggs, referred to the grand electoral college concept. I am aware of criticism of this concept in Hong Kong. If people have reservations about the idea or about any of the options for election to the legislature, it is important that they should come forward with feasible alternatives. It does not appear that any of the options in the draft is contrary to the joint declaration. Nevertheless, I noted the remarks which the noble Baroness made. As for the need for an authentic English text to which the noble Lord, Lord Irvine of Lairg, referred, there is considerable force in that argument. The Hong Kong courts will be working on the basis of the common law system and will need an official English text to be able to function properly. Article 9 of the draft Basic Law provides that the English language may also be used by the executive authorities, legislature and judicial organs of the Hong Kong SAR.

The noble Lord, Lord Cledwyn, referred to the provisions on the economy. We are well aware of the criticisms that some provisions in the draft—for example, provisions on low tax policy; a balanced budget and open financial and monetary policies—are inconsistent with the joint declaration provisions stipulating that the handling of policies in these areas will fall within the autonomy of the Hong Kong SAR Government. There is a cogent argument that it is inappropriate to enshrine such provisions in the Basic Law. We feel sure that the Chinese authorities will take account of criticism of these articles.

The formation of the first SAR government—a point raised by my noble friend, Lady Young, the noble Lord, Lord Cledwyn, and the noble Lord. Lord MacLehose—is a matter which is understandably generating much interest in Hong Kong. We are listening carefully to all views. We recognise that it is right for the arrangements for the first SAR government clearly to mark the change of sovereignty. But it is equally important that there should be continuity and a smooth transfer of government so as to maintain confidence both in Hong Kong and internationally.

My noble friend Lord Geddes raised the eligibility of Hong Kong people with foreign passports for certain political and civil service posts. I am aware of the concerns expressed about this issue in Hong Kong. It is a complex question which depends on the interpretation of Chinese nationality law. I know that the Chinese authorities are fully seized of the problem; only in the last few days senior Chinese officials visiting Hong Kong have indicated possible ways forward.

On a related point, perhaps I may also reassure my noble friend that the references to British Dependent Territories citizens in the Chinese memorandum associated with the joint declaration are in a form that clearly also applies to holders of BNO passports.

As the noble Lord, Lord Cledwyn, has said, we are now at the beginning of a lengthy period of consultation. The present draft, published on 28th April, will be open for comment for five months. During that period, delegations of drafters from the mainland will visit Hong Kong for intensive programmes of consultation. The first such delegation is at present in Hong Kong. A timetable has been drawn up to ensure that consideration is given systematically and in turn to each part of the draft. Thereafter the draft will be revised.

A second draft will be published in 1989 and the entire consultation process repeated before a further revision of the text is formally submitted to the National People's Congress in 1990, to be passed into law. That is, in total, no small consultative process. We heartily welcome the very considerable efforts in this direction made by the Chinese authorities. I hope that the noble Lord, Lord Kennet, will acknowledge that.

I am sure that the people of Hong Kong will participate fully in the consultative exercise and make known their views on the draft. It is important that they do so. There is every reason to believe that those responsible for drafting the Basic Law will be receptive to their views. We are assured that the draft is open to amendment in the light of the comments which are expressed.

Where Her Majesty's Government are concerned, I have explained our relationship to the drafting process. The Basic Law has already figured in a number of our exchanges with the Chinese Government. We are grateful for their readiness to brief us on progress and to explain their intentions.

I can assure the noble Lord, Lord Cledwyn, that Chinese Government spokesmen have encouraged us to convey our comments on the text to them through diplomatic channels, together with comments from the various organs of the Hong Kong Government. We shall certainly do this in pursuance of the contacts we have already had. In particular, where we conclude that there are elements in the text which may not be consistent with the joint declaration, we are bringing these to the attention of the Chinese Government. We shall continue to do so. I hope this will reassure my noble friend. Lady Young, whose thoughtful speech included comments on this aspect.

Our representations will continue to be vigilant and firm, but I think that your Lordships will understand if I suggest that those representations can most effectively be made in confidence through the various channels open to us.

It seems to me that the feelings of your Lordships on the draft Basic Law are as follows: that the drafting exercise is a remarkable one, carried out with a considerable openness and commitment to consultation; but that the draft is not yet right in all its parts, as all those involved readily acknowledge. Further we must acknowledge that concerns have been expressed in Hong Kong about certain articles of the draft, particularly perhaps those articles referred to today—16, 17, 18 and 169—and that those concerns should be given the most careful consideration by the British Government, and by the Chinese authorities too. I can assure your Lordships that that will be the case as regards the British Government, and, I have no doubt, as regards the Chinese too.

The noble Lords, Lord Cledwyn of Penrhos and Lord Tanlaw, and my noble friend Lord Geddes referred to the matter of emigration from Hong Kong or, as my noble friend put it, confidence in Hong Kong. We and the Hong Kong Government are watching trends carefully. It is clear that emigration trends are up. The latest available figures for which the noble Lord, Lord Cledwyn, asked, show that 27,000 departures occurred in 1987. That figure is higher than the figure for 1986, but not out of line with the historical average. Nevertheless, it seems that an increasing number of those leaving are from the professional and middle management areas.

There are a number of reasons for the increase in emigration. Hong Kong people are traditionally very mobile. Concern about the future is, no doubt, a factor influencing people's decisions, but it is by no means the only one. There has also been a marked increase in opportunities for emigration to some leading recipient countries, particularly Canada and Australia.

The Hong Kong Government have made it clear that they have no intention of stopping people leaving. Their efforts and ours will continue to be concentrated on making Hong Kong an attractive place in which to live and a place to which those who have left want to return. We welcome the recent decision by the Hong Kong Government to set up a taskforce to look into the reasons for emigration and to consider practical measures to counter its effects. I was interested to hear the views of the noble Lord, Lord Tanlaw, in this respect.

I referred earlier to the problems caused by the fresh influx of Vietnamese boat people into Hong Kong. I can assure your Lordships that we are acutely aware of the gravity of the crisis facing the territory. So far this year there have been more than 6,000 arrivals. The population of boat people has almost doubled in the past year. It now stands at 15,600. So far there have been about 1,500 arrivals in June alone. I am grateful to the noble Baroness Lady Ewart-Biggs, for her comments on the way in which these unfortunate people are looked after in Hong Kong in all the circumstances.

My right honourable and learned friend the Foreign Secretary made it clear when he was in Hong Kong—I endorse his remarks again today—that things simply cannot go on as they are. I can confirm to the noble Lord, Lord Cledwyn, that, as far as we can tell, the great majority of those now leaving Vietnam cannot be described as political refugees according to the definition of the UNHCR. The automatic resettlement of all those leaving Vietnam, for whatever reason, is not a practical proposition. Other countries cannot be expected to carry the burden of Vietnam's abysmal economic mismanagement, least of all a small and overcrowded territory such as Hong Kong.

It must be right in principle for these people, who are Vietnamese, to find their future in Vietnam. But despite international pressure the Vietnamese authorities refuse to take them back. I can assure the House that we are considering urgently, in the light of the discussions in Hong Kong of my right honourable and learned friend, how this grave problem can best be tackled.

My right honourable and learned friend also took the opportunity to raise the problem of the Vietnamese boat people with the Vietnamese, Chinese and Soviet Foreign Ministers in New York on 7th June. All three took careful note of our concerns. We shall continue to take every opportunity to emphasise to all governments concerned the need to find a durable solution to this sad problem. The noble Baroness, Lady Ewart-Biggs, is right; it is an international problem.

Perhaps I may conclude by emphasising three points. First, the joint declaration is standing the test of time. It was and is an excellent agreement for Hong Kong. We and the Chinese Government are totally committed to its implementation. Secondly, the people of Hong Kong have the talent and energy to make their future work. They have made Hong Kong a model of free enterprise. It is a success formula which the joint declaration and the draft Basic Law are designed to preserve.

Finally, the noble Lord, Lord Derwent, who speaks with particular authority and thoughtfulness on the subject of Hong Kong, rightly put in perspective the concerns that inevitably exist about the uncertainties of the future. To meet the point made by the noble Lord, Lord Tanlaw, I assure him that the Basic Law is indeed designed to ensure that the present dynamic business culture will continue to flourish. We shall pay careful attention to the concerns voiced in Hong Kong and do all we can to meet them. However, I have no doubt that the resilience of the Hong Kong people, the skill and experience of their government (I endorse every word of the noble Lord, Lord MacLehose, concerning Sir David Wilson) and the shared commitment of the British and Chinese governments can together turn the prospects enshrined in the joint declaration into reality to provide the stability and prosperity that Hong Kong so richly deserves.

2.27 p.m.

Lord Cledwyn of Penrhos

My Lords, I am grateful to all noble Lords who have contributed to the debate and made it such a significant occasion. I believe that the House will wish me to thank particularly the noble Lord, Lord Glenarthur, for his comprehensive reply. I am sure that all of us will be studying what he has said so that we may appreciate the full implications of his speech and his references to the problems raised in the debate.

I hope that the people of Hong Kong will have access to the record of our debate so that they may appreciate the authoritative and impressive discussion which we have had in the House today and also so that they may be assured of our commitment to their interests. I hope that they will further rest assured that we shall come back to these problems time and time again between now and 1997. My Lords, I beg leave to withdraw my Motion for Papers.

Motion for Papers, by leave, withdrawn.