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Tourism and the Community: ECC Report

6.24 p.m.

Lord Elibank: My Lords, I beg to move the Motion standing in my name on the Order Paper.

In view of the excellent debate we have already had, I shall not detain your Lordships. I too would like to thank all speakers in the debate, particularly those who made kindly reference to our report; and I congratulate the two maiden speakers on very interesting speeches.

Moved, That this House take note of the Report of the European Communities Committee on Tourism and the Community (Sixth Report, HL Paper 39).--(Lord Elibank.)

On Question, Motion agreed to.

Hong Kong

6.25 p.m.

Lord Willoughby de Broke rose to call attention to the situation in Hong Kong; and to move for Papers.

The noble Lord said: My Lords, very nearly two years have gone by since we last debated Hong Kong in this House and, if my shaky arithmetic is correct, there now remain only 432 days until Hong Kong reverts to China. During those two years much has been achieved. The Court of Final Appeal has been established. Airport financing arrangements have been agreed with China, which has at least agreed to the building of the container terminal 9, so vital to maintain Hong Kong's position as the number one container port in the world.

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Last autumn Hong Kong chose its first wholly elected Legislative Council and more recently the Preparatory Committee was established. During the visit of my right honourable friend the Prime Minister to Hong Kong in March of this year, he announced that Britain will give visa-free access to this country to all Hong Kong SAR passport holders after 1997. This decision was warmly welcomed in Hong Kong, and it was made during a remarkable speech to which I shall refer later.

Much progress has been made, but there have been and remain differences between our position and that of China. To some extent this has been the case since the Joint Declaration was first signed and, more particularly, since the desperate events in Tiananmen Square, which so grievously changed the Britain/China/Hong Kong negotiating climate. These difficulties and differences have caused Hong Kong to be written off on several occasions since 1984. I remember headlines such as: "The bell is tolling for Hong Kong" and "Hong Kong: will the last person to leave please switch out the lights?"--repeated predictions of a flight of people, of companies and of capital.

I will not weary your Lordships with a litany of statistics, but it is worth looking at what has happened as against what everyone said was going to happen. Hong Kong is now the world's eighth largest trading economy. Hong Kong produces 25 per cent. of the gross domestic product of the whole of China--this from an area about the size of the Isle of Wight. Hong Kong now has a higher output per head than Britain. Hong Kong has 52 billion US dollars of foreign exchange reserves, and if you look for a public sector borrowing requirement you will look in vain because there ain't no such animal in Hong Kong. In 1984 that sometimes erratic barometer of Hong Kong confidence, the Hang Seng Index, stood around 1,000. Today it stands at around 11,000. No lights are going out in Hong Kong--and if you are touched for the price of lunch by a down-at-heel gentleman with frayed suit and soup stains on his tie, it is probably because he was unwise enough to bet against Hong Kong.

So what are the ingredients that have made Hong Kong so special? The unique blend of know-how, energy and commercial acumen of the people who work there, harnessed to our contribution to Hong Kong's success story; the rule of law and an impartial judiciary, a dedicated and able civil service and a top-notch police force. To these add a free economy, a free press, freedom of worship and freedom of assembly. These, I suggest, are the strands which make up Hong Kong's astonishing success story. I suggest that they are indivisible; you cannot pick and choose the bits you want and the bits you do not want. I make that point because there are worrying signs that China does not really understand what makes Hong Kong tick. Am I alone in finding it mildly surprising that none of the top Chinese leaders has ever visited Hong Kong?

On the business front, Chinese officials seem to want to interfere in what are purely economic and commercial matters. Examples are the current row over mobile telephone licensing, the damaging delay caused to the progress of container terminal 9 by allowing the political

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agenda to blur what should be a commercial decision and the astonishing demand that China be involved in framing Hong Kong's 1997 budget.

SAR stands for special autonomous region--and Hong Kong will have to defend vigorously that autonomy which it has been promised by Britain and China. That means that Hong Kong businessmen who have done so very well out of that territory will have to speak up for its rights, which in the end are their rights. In support of that, I quote from a recent article in the Financial Times, written by one of Hong Kong's most respected business leaders. It states:

    "We owe this to the community that has allowed us to prosper over the years, and we owe it to ourselves and our shareholders. If these issues go wrong the business opportunities in Hong Kong and the region will be far fewer than we hope now".
Those words should be stuck on the shaving mirror of every chairman and chief executive in Hong Kong.

China is going through a bad patch. Its attempted intimidation of Taiwan backfired badly--and simply put more votes into the freedom and democracy ballot boxes. Heavy-handed interference in Hong Kong's administrative and political process is bound to be equally counter-productive, which brings me to the declared intention of the Chinese Government to abolish the present Legislative Council and replace it with something called the "Provisional Council". This Legislative Council, the first to be wholly elected in Hong Kong, was elected in open and fair elections in which nearly 1 million people turned out to vote. It is fully consistent with both the Joint Declaration and the Basic Law. The Legislative Council was properly elected, properly constituted and must be allowed to run its agreed term through to 1999.

I have looked carefully at both the Joint Declaration and the Basic Law and I can find no reference anywhere to any such thing as a "Provisional" Legislative Council. It is clearly unconstitutional. How provisional is "provisional"? One month? Six months? One year? Two years? And what functions will it perform? What possible legitimacy can that body have to enact laws that will affect Hong Kong's freedoms? Its proposed electoral process is a sham. The present LegCo was elected by nearly 1 million voters in open and fair elections. The provisional LegCo is, it is proposed, to be elected in a smoke-filled room by a handpicked 400, who themselves will be chosen by Chinese nominated members of the Preparatory Committee. Significantly, not a single democrat or independent who won a popular mandate in the election has been invited to sit on the Preparatory Committee. If that is "Hong Kong people ruling Hong Kong", I will eat my Peer's robes.

China had also announced that it intended to install that sham LegCo even before the handover and was to require Hong Kong's civil servants to co-operate with it or risk losing their jobs when China takes over. I understand that recent discussions between my right honourable friend the Foreign Secretary and his Chinese opposite number have established clearly that the Hong Kong Civil Service is to remain politically impartial and will serve the Hong Kong Government up to 1st July 1997 and the SAR Government thereafter. That is of course most welcome, but China should be aware that

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that episode has caused needless worry to civil servants in Hong Kong who will have a difficult enough task in any case in the run-up to 1997 and the years beyond.

When my noble friend replies, I hope that he will be able to underline the Government's commitment to pursue those matters with the Chinese Government and to remind them of the commitments that they made in the Joint Declaration. Can he confirm that my right honourable friend the Deputy Prime Minister will also be voicing our concerns on this matter during his forthcoming trade mission to China?

One other matter which needs to be resolved is the question of human rights in Hong Kong after 1997. There is provision in the Joint Declaration and the Basic Law for the International Covenant on Civil and Political Rights and the International Covenant on Economic Cultural and Social Rights to apply after the transfer of sovereignty. However, China is not a signatory to either of those covenants. Can my noble friend clarify the position and tell the House what progress has been made on enabling Hong Kong to report on the implementation of those covenants, as required by the United Nations Human Rights Committee? Would not the simplest method be for China to accede to those covenants?

The matters to which I have referred are naturally having an effect on confidence in Hong Kong and by the same token are affecting China's own considerable interests in the most successful city state since Venice.

Chinese wisdom is often encapsulated in parables. I should like to add my own contribution to that canon. When I was a small boy, about five or six years-old, I used to go to stay with my grandmother. I greatly enjoyed it since she used to spoil me horribly. On one of those visits I was confined to bed with some deeply unattractive childhood illness. In my bedroom on the mantlepiece was a very nice carriage clock, with a satisfactory tick and an even more satisfactory chime. Bored one day--and not knowing my limitations as well as I know them now--I decided to investigate the clock to see what made it tick and what made it chime. I soon had screws, springs and cogs all over the floor. My curiosity satisfied, I thought I had better put it back together again before my grandmother came upstairs to visit me. All was well after I had reassembled it, so I thought, but it was then that I noticed a number of cogs, springs and wheels all over the floor, grinning up at me. I had then with my grandmother what the Foreign Office calls "full and frank discussions". The clock was never quite the same.

I shall not labour the point, but it is crucial to Hong Kong's future and to the future of all who have invested so much in it that the undertakings in the Joint Declaration be properly observed: "one country two systems" and "Hong Kong people ruling Hong Kong". For those reasons alone, although there are others, the speech made by my right honourable friend the Prime Minister in Hong Kong on 4th March, to which I have already referred, was an extremely important statement of Britain's position on Hong Kong. I should like to quote two key sentences from it:

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    "We in Britain will have continuing responsibilities to the people of Hong Kong; not just a moral responsibility as the former colonial power and as a staunch friend of Hong Kong, but a specific responsibility as a signatory to the Joint Declaration. We shall watch over the implementation of the Treaty ... we shall ensure that others are watching too--Hong Kong will never have to walk alone".
How I welcome that clear and unmistakable statement of our position. It should be the bedrock of our policy on Hong Kong, and I very much hope that other noble Lords who are to speak in this debate will support that unambiguous backing for Hong Kong from my right honourable friend the Prime Minister.

There are two other points in that speech on which I should like to touch briefly. I refer first to the decision to grant a very small number of Hong Kong war widows full British citizenship. That is something that has concerned Members of this House and another place for some time and I know that that decision has been warmly welcomed in Hong Kong. I understand that the mechanics of getting a Private Member's Bill through Parliament are being discussed, and the intention is that that will happen during this Session of Parliament. Can my noble friend please confirm that that is indeed the case? Perhaps he can tell us the exact state of play.

The other passport matter referred to in that speech related to the non-Chinese ethnic minorities in Hong Kong. Again, the subject is familiar to your Lordships. In July 1993 the Motion of the late Lord Bonham-Carter to give those 4,000 or so people full British citizenship was supported by all noble Lords who spoke in that debate, including several noble Lords who are here tonight, and was carried when the matter was put to a vote.

In his speech my right honourable friend the Prime Minister made a concession to their case by strengthening the form of words which the Government see as their protection, from,

    "Her Majesty's Government will look with particular and considerable sympathy at their case should they come under pressure to leave Hong Kong",

    "Her Majesty's Government will guarantee admission and settlement should they come under pressure to leave Hong Kong".
With the greatest possible respect, that is just moving the furniture around and it really is not good enough. Who is going to define "pressure"? That will be a subjective judgment, depending on whether you define it in Hong Kong or from a ministerial office in Whitehall. My right honourable friend the Prime Minister has implicitly admitted in his speech that the ethnic minorities have a problem--and that problem is not answered by what is essentially an asylum solution. The ethnic minorities will have a right of abode in Hong Kong, but no nationality; a travel document (the BNO passport), but no citizenship. I hope that the Government will rethink their position and restore British citizenship to those people, many of whom had it removed from them during amendments to the Immigration Act. If that happens, I will happily give the Prime Minister's speech alpha plus instead of alpha straight.

As my right honourable friend the Prime Minister stated so clearly, we have a legal and moral obligation to Hong Kong, not only in the run-up to July 1997 but

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during the next 50 years. I have spoken about our duty to Hong Kong. Let us also remember that Britain has huge interests in Hong Kong's future as the investment and enterprise centre of South-East Asia. Thousands of British companies do billions of pounds' worth of business in Hong Kong, and from Hong Kong into the markets of the whole Pacific Rim. We must not behave as though this is just another colonial mopping-up exercise in which the main objective is a dignified withdrawal. Hong Kong's and Britain's interests are the same and are best served by a strong defence of the way Hong Kong works.

The Governor, Chris Patten, has strongly defended Hong Kong's rights. For his pains, he has been subjected to a shameful campaign of personal abuse and calculated discourtesy from the Chinese Government for going too far. He has been attacked by democrats in Hong Kong for not going far enough, and he has been subjected to flanking fire from big business both in Hong Kong and in this country. Yet he and his policies still enjoy over 70 per cent. approval rating in Hong Kong, so he must be doing something right. What he has done--which I believe history will recognise--is make people in Hong Kong aware that they have a say in their destiny. He has helped to make them aware of what is important and what is worth fighting for. Above all, he has made it much more difficult for the candles of freedom to be extinguished. I believe that those lights of enterprise and freedom will continue to burn. I will not be betting against Hong Kong. I beg to move for Papers.

6.41 p.m.

Lord Dubs: My Lords, I should like to congratulate the noble Lord, Lord Willoughby de Broke, upon securing this debate. I am in agreement with many of the comments that he made. I am also conscious that many noble Lords who will speak later in the debate have far more knowledge and experience of Hong Kong than I have, but I have the privilege of taking part in the discussion today. This may well be the last debate in this House before 1st July 1997.

Last October I had the opportunity to visit Hong Kong. I have been to Hong Kong a number of times. I am always confirmed in my belief when I speak to Americans that Hong Kong is the one place in the world which makes Manhattan seem slow. Everybody I have met in Hong Kong has been consistently helpful and anxious to ensure that I have access to what I wish to see and know. I also thank the Hong Kong Government Office in London for its continuing helpfulness to Members of this House and another place. I thank the office of the Hong Kong Legislative Council in London, too, for its unfailing helpfulness.

With the wisdom of hindsight, I suppose one would say that democracy should have been in place before negotiations with China took place at all. That is a sad comment, but I am sure that everybody is in agreement with it. However, it is now history. I am impressed by Chris Patten in his role as Governor of Hong Kong. I regret that he is under attack from so many quarters, including at least one ex-Foreign Office official. The

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more Chris Patten is undermined by people here who should not undermine him, the weaker his position will be in speaking up for the rights of people in Hong Kong in the next year or so before Hong Kong passes to China.

I spent some time travelling on Hong Kong's excellent public transport system. I stopped people to ask them what they thought of Chris Patten. Without fail, people in the markets said that they liked him. I would have thought that his approval rating in Hong Kong was higher than that of most politicians in countries all over the world. The key point is that China must realise that the world is watching what it does in Hong Kong. China's attitude to human rights will be viewed very much in relation to what China is doing and will do in Hong Kong.

There are positive aspects. I refer to China's enormous investment in Hong Kong itself and the autonomous zone on the mainland opposite, to its decision in relation to the Court of Appeal, on which the noble Lord, Lord Willoughby de Broke, has commented, to its agreement on the financing of the airport and to the fact that China has climbed down on its demand for loyalty tests for Hong Kong civil servants. The fact is that the economy of Hong Kong is extremely successful. Some years ago, a British Government Minister said to me that it was a pity that we could not run our economy as successfully as Hong Kong ran theirs.

One word characterises anxieties about Hong Kong: confidence. Confidence is crucial both for the people of Hong Kong and for those outside who will want to continue to trade with Hong Kong after 1st July next year. Without confidence, I suggest that Hong Kong will stop functioning in the way it now does. On a previous visit to Hong Kong I spoke to a Hong Kong businessman who was engaged in a good deal of activity in Canton and the surrounding area. He had spoken to Chinese businessmen from Canton who had told him that they and Hong Kong could do business together provided there was not undue interference from people in Beijing who did not understand how they functioned. The danger is that, if confidence evaporates, Hong Kong will turn out to amount to little more than Shanghai.

I refer to a number of issues that damage confidence both in Hong Kong and here as we look to Hong Kong. I refer first to the decision to set up a provisional LegCo. The proper LegCo now in place in Hong Kong is the first fully democratically elected body. It was elected in September 1995. We have an obligation to support those elected people at a difficult time. They are being undermined by suggestions that a provisional body should be set up. What will the British Government do about it? John Major has said:

    "If there were to be any suggestion of a breach of the Joint Declaration we would have a duty to pursue every legal and other avenue available to us".
It is beyond doubt that they are breaching the Joint Declaration by trying to set up a provisional LegCo. Therefore, I regret that, in referring to a possible breach of the Joint Declaration, the Foreign Secretary said in a letter to Christine Loh--one of the many eminent members of LegCo:

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    "I see no benefit in speculating now on precisely what we would do in such circumstances".
But those circumstances have arrived as of this moment. The suggestion that a provisional LegCo should be established in competition with the proper LegCo is already a breach of the Joint Declaration. It is up to the Government and the country to act on the commitment that the Prime Minister gave. He said that we would use every legal and other avenue available to us. I ask the Government to start to do that now.

The next matter of concern is the possibility of corruption. It is a tribute to the effectiveness of the administration that there is very little corruption in Hong Kong. There is a danger that, unless China treats this as a specific issue, corruption will creep into Hong Kong from the mainland. That would be disastrous for confidence in Hong Kong and for the wellbeing and efficient functioning of Hong Kong.

When the Prime Minister visited Hong Kong in March of this year, he gave a number of undertakings, some of which the noble Lord, Lord Willoughby de Broke, has already mentioned. He gave an undertaking about visa-free access to Hong Kong's Special Administrative Region passport holders, which was a very good thing. He also gave a commitment to ethnic minorities, but it was qualified (as the noble Lord, Lord Willoughby de Broke, has said) by "if they were to come under pressure to leave". That has left very unhappy the ethnic minorities in Hong Kong--some 4,000 or 5,000 people--without guaranteed citizenship rights of China from July of next year. I urge the Government to look again at this matter to see whether they can do a bit more for those people.

I turn to war widows. It is good that the Prime Minister has made a commitment in this respect. However, what kind of commitment is it when the Prime Minister suggests that a Private Member's Bill will do it? The Prime Minister is in charge of the Government. For heaven's sake, why do we do not have a government Bill to deal with the matter of 20 or 30 war widows which has been an anomaly and a disgrace to us as a country? We want a government Bill, not a Private Member's Bill.

I turn to the question of human rights. At present, Hong Kong has a reporting right under the Covenant on Civil and Political Rights and the International Covenant on Economic, Social and Cultural Rights. I am certain that there will be overwhelming support in this House for the idea that reporting should continue. It is urgent that the Government should exercise the maximum pressure and influence on the Government of China to ensure that, after Hong Kong goes over to China, such reporting will continue. Of course, the Chinese Government does not report as regards its own position.

I turn now to the situation of the Vietnamese boat people, which is worthy of a debate in itself. It is a pity that, every time the Vietnamese boat people who are in Hong Kong are persuaded to start volunteering to return to Vietnam under the scheme of the United Nations High Commissioner for Refugees, there is an occasional American politician who puts forward arguments which suggest to people that, because they might end up in the United States, or wherever, they should not volunteer

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to go back. It is very irresponsible of some American politicians to do that at intervals--and I shall not repeat their names--when they do not have the ability to say to those people, "We will take you into the United States", and when they are simply causing further agony and torment to people who left Vietnam in the belief that they would reach a Western country. When they realise that they cannot do so and they volunteer to go back, we have the semblance of a solution to a very difficult problem in human terms which has made the Vietnamese boat people its victims. American politicians should not play dirty politics with the future of those people.

There is one single step, apart from abolishing the idea of the provisional LegCo, which China could take to give Hong Kong proper confidence; that is, that when considering appointing the person to be Chief Executive in Hong Kong those concerned should appoint the present one, Anson Chan. She has done an outstandingly good job by all accounts and she is a first-class administrator. If she were to be appointed, at one stroke of the pen confidence in Hong Kong would rise enormously. Indeed, Hong Kong is lucky to have such a capable woman as its Chief Executive, along with the many other outstandingly capable women members of LegCo, whose position is, of course, endangered by the provisional LegCo suggestion.

I very much hope that the hand-over ceremony will not become a messy business and that there will be a proper agreement between China and our Government to have a ceremony which is worthy of Hong Kong, its people and its future. One country, two systems must mean more than economic policy: it must also mean justice, politics and administration as being two systems under one country. I contend that in the remaining months before the Union Jack is hauled down for the last time Britain still has an enormous responsibility to do the right thing by the people of Hong Kong. We must do our best to give Hong Kong a successful, prosperous and democratic future.

6.52 p.m.

Lord Wilson of Tillyorn: My Lords, I, too, very much welcome the opportunity to debate Hong Kong, even briefly. I am grateful to the noble Lord, Lord Willoughby de Broke, for providing us with the chance to do so. It is a remarkable fact, as the noble Lord just pointed out, that more time has elapsed since we last debated the issue than now remains before the transfer of sovereignty next year. Yet, Hong Kong remains one of the key economic factors in the world and one of our most important overseas responsibilities. From every point of view--and, most notably, from the point of view of the people of Hong Kong--it is of the utmost importance that we should handle the remaining period with the greatest care and skill.

Perhaps the reason that we debate the issue relatively seldom is that it is a complex one. The detail matters. The history of how we got to where we are today matters. History itself matters, from the 19th century onwards. The detail of the negotiations for the Joint Declaration and in the Joint Declaration itself matters. Indeed, all these things matter. They are realities which

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cannot be compressed into a sound bite, a headline or even into one of those short news stories whether they be about turning out the lights or anything else.

Given the fact that our time is limited, I should like to concentrate on just a few points. First, Hong Kong remains a success story; indeed, remarkably so, as the noble Lord, Lord Willoughby de Broke, pointed out. I, too, had a chance to see that for myself briefly in January. One sees the new airport literally rising out of the sea. It was very good to hear that the Prime Minister was rolling out some of the first tarmac for the runway on his recent visit. Who would have imagined that 12 years ago, when we were in the final tense stages of negotiating the Joint Declaration?

Moreover, to add to the noble Lord's statistics, GDP growth has been at an average of over 5 per cent. per year in real terms for five years and per capita GDP is now higher than in Britain and in many other countries in the European Union. If one puts together Hong Kong's general reserves as well as the Exchange Fund, that reveals the remarkable figure of some 75 billion US dollars. One can then add to that, in July of next year, the Land Fund, which will go to the SAR Government, and which will then be something like 18 billion US dollars. Above all, one gets in Hong Kong this sense of buzz and of dynamism which has made it so successful. Who would have imagined all of that 12 years ago?

Much of what has been achieved is attributable to the skill and the dedication of the Hong Kong Civil Service. Of course businessmen, both foreign and local, have played a crucial role; but the framework and the continuity are provided by Hong Kong's Civil Service--and a very good bunch of people they are. For example, it is very good to see local civil servants like Anson Chan, as Chief Secretary, or Donald Tsung, as Financial Secretary, taking up their posts with such skill, dedication and determination.

I believe we would all agree that it is essential that such a very effective Civil Service should go on serving the people of Hong Kong, after July 1997 as well as in the period up until that time; and that it should be impartial in doing so. It was encouraging to see the Chinese Foreign Minister Mr. Qian Qichen, in his recent discussions with the Foreign Secretary, confirming his hope that all civil servants, as in the Joint Declaration, would stay on after July 1997.

However, the issue goes deeper than just staying on. The Civil Service must be impartial, and it must know that it is not under threat. Its members must not be put in a position by the Chinese, or by ourselves, where they appear to be being forced to take sides in matters which are diplomatic disputes between Britain and China. They should be in an atmosphere where they know that they are being encouraged to go on serving after July 1997.

One area of potential and unenviable difficulty for civil servants will be in relation to a Provisional Legislative Council. Much has been said on the subject--indeed, both noble Lords have already referred to it--and much no doubt will be said in the months to come. I believe that we need to face reality. The reality is that, for better or for worse, the Legislative Council,

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as it now exists, will cease to exist at the beginning of July 1997. That is not a new revelation. It has been apparent since the arrangements for the present Legislative Council were first put in place without our being able to reach agreement with China. It was also apparent, and the point was made, when we debated the subject two years ago.

If there is a Provisional Legislative Council, then two things will follow. First, the sooner that a new elected Council under the Basic Law is established the better. It would be advantageous if that were to happen before the end of 1997 rather than within a period of a year, which is what is now being said. Secondly, that Council needs to be efficient, effective, and in keeping with Hong Kong's legal and policy traditions from day one. Surely both of those things mean that, before they have any authority at all, members of that Council need advice from those who have experience--and that is likely to include people in the Civil Service. As a matter of policy we may have set our faces against the existence of a Provisional Legislative Council. However, as a matter of pragmatism, we need to deal with the reality that it is going to exist.

The relationship with China is never an easy one. We come to so many issues from different points of view. Our traditions and our histories are different. Sometimes, looking back on history, it seems as though neither the Chinese nor ourselves have learnt from the mistakes of the past. But now we have a common goal, and that is the continued success of Hong Kong and its people after the transfer of sovereignty in 1997. Building that sense of a common objective will require restraint and sensitivity from both sides. Putting our points quietly and, if necessary forcefully in private tends to produce better results than shouting from the rooftops.

The Chinese on their side need to understand the diversity of Hong Kong, which is its strength, and deal with those diverse elements rather than shunning them, however uncomfortable they may sometimes find the process to be. What matters is that we have a Joint Declaration. We need to do everything possible in the coming months to build up that sense of "joint". We have an historical obligation to do so. We have a treaty commitment to do it; and, above all, we have a responsibility to the people of Hong Kong to do it.

7.1 p.m.

Baroness Thatcher: My Lords, I, too, am grateful to my noble friend for initiating this debate and I am happy to follow the noble Lord, Lord Wilson, who as governor, and like his successor, showed great leadership qualities in Hong Kong over a difficult period.

When I look back over the 12 years since Mr Deng Xiaoping and I agreed the Joint Declaration on Hong Kong's future, I am enormously encouraged by how well Hong Kong has done. The doomsayers who predicted decline, or even disaster, as 1997 drew closer underestimated the resilience and irrepressible energy of Hong Kong's people. Hong Kong today is a city in its prime, a thriving centre of enterprise, perhaps the most entrepreneurial community in the world. Its people have

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built their economy into one of the world's leading centres of trade and financial services, and at the same time steadily made their way of life and governance more open and democratic.

When I was last in Hong Kong in January, I visited the remarkable new Tsing Ma Bridge, which will be the world's largest single-span suspension bridge, leading to the spectacular new airport. These are not new projects devised and carried out by people who are depressed and frightened about what lies ahead. Rather, they exude optimism about the future and confidence that the talents and initiative of Hong Kong's people will continue to have full rein after 1997.

That confidence is visibly shared by the world's business community which continues to invest in Hong Kong, to establish offices and regional headquarters there and to plan for the further expansion of its business. I understand that in the past 12 months alone the number of British people living and working in Hong Kong has actually risen by 11,000.

So looking forward, there are good grounds to expect that Hong Kong will flourish after 1997, as we envisaged when we negotiated and signed the Joint Declaration. I certainly believe that it will. China has the greatest interest of all in seeing Hong Kong prosper. After all, why else did China agree in the Joint Declaration that Hong Kong's way of life and free market system based on a rule of law should continue unchanged for 50 years after 1997, if it was not because it wants Hong Kong to continue to do well?

Of course the years since 1984 have provided their share of difficulties and problems. These things never go without a hitch. China obviously had problems in coming to terms with the practical implications of one country, two systems, especially as Hong Kong's way of life and degree of personal and political freedom are very different from China's own. These differences--and they are profound--have led China to misjudge the effect of some of its actions both on opinion in Hong Kong and on international opinion generally. That is particularly true of China's unfortunate, and I believe unjustifiable intention, to dismantle Hong Kong's elected Legislative Council. All speakers have raised that point. That would not be consistent with the Joint Declaration. To turn back the clock on democracy in Hong Kong--modest as that democracy is--gives Hong Kong and the world precisely the wrong signal about China's future intentions.

The best possible start for China in 1997 would be to keep the present members of the elected legislature unchanged until the due time of the next elections. Magnanimity is not seldom the truest wisdom, and I think it is better than pragmatism.

Some of China's statements have also destabilised Hong Kong's outstanding Civil Service, whose continued willingness to serve the new sovereign power as loyally and effectively as it has served the British sovereign power is absolutely crucial to Hong Kong's future success. I am glad to see that the Chinese Foreign Minister reassured our own Foreign Secretary on this point when they met at the weekend.

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I hope too that our Chinese friends will consult not only those in Hong Kong who share their views but also those who think differently. Hong Kong is not a monochrome city where everyone holds the same opinions: it would never have been so successful if it were. In its own interest China should hear the widest possible range of views before reaching its decisions. The world will view the manner in which China resumes sovereignty over Hong Kong as a crucial test of how she intends to behave internationally. It is thus an opportunity for her, and I urge China to act in a way that shows that the fears which exist about her actions and intentions are misplaced.

I believe that the Government, with the Opposition's support, have carried out honourably their duty to work for a smooth transition. Moreover, as the Prime Minister has said, Britain's obligations to Hong Kong and its people do not end on 1st July 1997, bearing in mind that the Joint Liaison Group continues its existence until the year 2000. We must therefore continue to take a close and sympathetic interest in Hong Kong's future and in everything which happens to it after 1997. We should also maximise our trade and commerce with both Hong Kong and China. I believe that the unique spirit of Hong Kong's people, the skills of its Civil Service, the acumen of its businessmen and the wisdom and self-interest of China will ensure that the passage from British sovereignty back to China will be a safe one.

7.8 p.m.

Lord MacLehose of Beoch: My Lords, it is a great honour to follow the noble Baroness. I seem to recollect that when she was leader of the Opposition I had the pleasure of being her host in Hong Kong. I explained to her what the future held and when that shoe was likely to pinch, which would be in the early '80s. With typical lack of discretion I said that as she might well be Prime Minister at the time I hoped she would take great interest in Hong Kong's affairs, and so she did.

I am glad that in introducing this debate the noble Lord, Lord Willoughby de Broke, and all subsequent speakers, paid tribute to the economic well-being of Hong Kong. It is doing extraordinarily well, but since China is apt to be cast as the villain of the piece it is as well to point out that much of Hong Kong's prosperity results from the prosperity that has transformed much of China since the sweeping reforms courageously introduced and persevered with by Deng Xiaoping. It is against that background that the private sector in Hong Kong was able to seize the opportunity to invest and work with businesses in the rest of China to their great mutual benefit and to the benefit of all people in Hong Kong.

I, for one, believe that the change of sovereignty should not greatly affect that situation, and that this mutual prosperity is likely to continue since there is no problem about Hong Kong/China relations in the private sector economic and financial fields.

It is good news, I believe, that officials have just agreed on the principles and procedures on which the budget for 1997-98 should be conducted. That has been done in close collaboration with their Chinese vis-o-vis.

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I do not know whether there is a difference in the information that I have and that of the noble Lord, Lord Willoughby de Broke. However, if I am right, it is a good augury for the future because such an issue could have been the subject of endless fruitless argument. Perhaps when the Minister winds up he will cover that point.

An excellent economic and financial situation is a great asset for the people of Hong Kong when approaching the problems of transition. However, a different but, to my mind, an even more important asset is one to which other speakers have referred. It is significant that all have done so. I refer to the excellence of the public services. I found them equal to any public service in any of the seven countries in which I have served. They are non-political and committed to the service of the Hong Kong people and the Government of Hong Kong. The public service is composed of men and women of the highest calibre. Their professionalism and skill, and freedom from corruption, have been crucial to the huge improvements in the economic and social life of the people over the past 20 or 30 years. I believe that they will be equally crucial for the success that we all wish for the SAR.

I have, therefore, been deeply concerned that, in the heat of new political developments and the noisy political exchanges about them, nothing should be done or said that will confuse or discourage the public services. As we know, something of that sort happened recently. It was good news, therefore, that in the Secretary of State's recent meeting with his Chinese colleague, there appears to have been mutual understanding about the importance of the service to Hong Kong, its non-political character, and the need not to confront or confuse it with choices of conflicting loyalty. In winding up, it would be useful if the Minister will confirm that that optimistic note is correct.

The most obvious potential problem of conflict of loyalty for the public service lay in the prospect of a plurality of councils all making claims on the public service while the public service was still trying to run Hong Kong. Hong Kong would have the sitting Legislative Council, the Preparatory Committee and the expected Provisional Legislative Council. It may be that progress is being made in some respects if reports are correct that the Executive Council has agreed to most Chinese requests at least for collaboration with the Preparatory Committee. I hope, again, that the Minister will confirm that because it is an important development.

That leaves the question of how the provisional council is to be dealt with since the Government totally object to it--and I can understand why. However, here, too, in practice things may not be as bad as they appear in principle. Provided that the co-existence of the sitting and provisional councils is fairly short, ingenuity, informality and a modicum of common sense should surmount the problem. Much in this, as in so much else, will depend on the personality of the new chief executive, to be designated. There is a report in today's Hong Kong Standard that the provisional council is scheduled to be in place, "early next year"; and if that

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is right it would appear to result in only a few months of duality. Perhaps the Minister will agree that the shorter the Chinese Government contrive to make this period of duality, the better it will be for the people of Hong Kong.

I apologise for asking the Minister to respond to so many questions. However, I hope that he will confirm my impression that the political relationship with China has improved slightly, and that members of the Hong Kong public service are now being freed to play a larger part, together with their Chinese vis-o-vis, in tackling the work necessary if the transition is to go tolerably smoothly. With the end of the concept of a through train for the Legislative Council, a heavy responsibility falls on members of the public service to keep things going. That is why I have taken up so much of your Lordships' time in talking about them. It has been their city all their working lives, and it is they who, I believe, will play the major part in maintaining Hong Kong's prosperity and international reputation in the future, based on a sound working relationship with the new chief executive.

7.18 p.m.

Lord Skidelsky: My Lords, I, too, am grateful to my noble friend for introducing the debate. It has already been graced by several remarkable contributions. Noble Lords have talked about a crisis of confidence in Hong Kong. To my mind, that crisis of confidence arises directly from the credibility gap between what China promised and what many people in Hong Kong now expect.

In the Joint Declaration of 1984 China undertook to preserve Hong Kong's "lifestyle" and "rights and freedoms" for 50 years. The Basic Law set out in some detail the governmental structure designed to underpin those "rights and freedoms", including a legislative council elected by universal suffrage, exercising wide law-making powers, as well as the right to impeach the chief executive if he or she broke the law. Its independence from the Executive and its democratic legitimacy as established in free elections, together with the Bill of Rights, thus lie at the heart of the guarantees of Hong Kong's freedoms.

Let me add a further point. It is only from strong local institutions that a strong political leadership can emerge. I know that it is Communist doctrine that there cannot be any conflicts of interest in a Communist society. But in any real world there always are, and Hong Kong's interests are bound at times to conflict with those of Beijing. Hong Kong needs a strong leadership to defend its interests within China much more than it needed one to defend its interests outside China. That is what politicians are for. It cannot all be done by businessmen, as businessmen sometimes believe.

This constitutional infrastructure has had to be created by the British Government before the handover. Indeed, it has only been built since 1992, when Chris Patten became Governor. The reason is that Hong Kong was a colony whose freedoms were protected by the British Parliament. After 1997, that protection is withdrawn; hence the urgent need for new local institutions. A Court

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of Final Appeal has been established; a Bill of Rights is in place; and last year a Legislative Council was set up, elected on a wide franchise in multi-party elections.

Each step in the move from general promises to concrete institutional guarantees has been resisted by China, despite all efforts to secure its co-operation. Now China has said that it will restore the "colonial" clauses in the Bill of Rights and abolish the recently elected LegCo, replacing it with a hand-picked provisional legislature, itself chosen by a hand-picked Preparatory Commission, from which Hong Kong's largest party, the Democratic Party, has been excluded. When Frederick Fung voted on the Preparatory Commission against the abolition of the existing LegCo, he was told in no uncertain terms that his political life in Hong Kong would be terminated. Further, no members of the Democratic Party are to be allowed a share in choosing the chief executive.

The message from all this is clear. The Chinese Government do not want any local institutions which might weaken their own control over the political life of Hong Kong. To put it bluntly, they will not tolerate democracy in any shape or form. China's vision of "one country, two systems" is confined to economics. In politics, it is "one country, one system"--the system which produced Tiananmen Square.

China's spokesmen argue that Britain is trying to impose limits on China's sovereignty which it never accepted for itself when it was Hong Kong's sovereign. To this charge there seems to be a clear answer. The new constitution was not imposed on Hong Kong by the British Government. Our Government responded--in many people's opinion inadequately and belatedly--to the demand of the people of Hong Kong themselves. Their demand for institutionally embedded guarantees was a measure of their mistrust of their new sovereign. China's opposition to those institutions is the main cause of the existing crisis of confidence.

Nor can we say any longer, as some noble Lords did when we debated these questions in the past, that democracy is unsuited to the Asian character. Democracy has arrived in East Asia. The only countries which now resist it in principle are the few remaining communist states. Whatever may have been true before, by today's standards the abolition of democracy would be a profoundly retrograde step. I do not see how we could hand over our responsibilities with a good conscience if we thought that would be likely to happen. As the Governor said in his broadcast three days ago, the survival of a "cleanly elected legislature" is the,

    "litmus test of what else will survive".

The way the Hong Kong Government have sought to entrench the freedoms associated with the Joint Declaration is not some personal folly of Chris Patten, as some people have argued. It is the policy of our Government. It has just been endorsed by the Foreign Secretary, who said that the abolition of LegCo was "neither acceptable nor necessary". As has been pointed out in the debate, the Prime Minister recently reminded China that Britain had a 50-year responsibility towards Hong Kong as joint signatory of the 1984 Declaration. "Hong Kong", John Major said, "will never walk alone".

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The question is: what can we do to ensure the outcome that we all want? First, we have to probe China's intentions. If China insists on abolishing the present LegCo, how long will the provisional legislature last? One year is being suggested; that is surely too long. By what system will the new legislature be elected? We have only the vaguest ideas about that. Will the Democratic Party be granted an unencumbered right to participate in any election? We do not know. Article 70 of the Basic Law states that if the chief executive dissolves the Legislative Council, it must be reconstituted within three months. In 1994 the National People's Congress only talked about "dissolution", not about "abolition". This may offer a way forward, provided that the new LegCo is not inferior in powers, functions or democratic legitimacy to the existing one. That, I believe, must be our sticking point.

We should make every effort to draw China into discussions leading to a reasonable outcome. But suppose it refuses to play? Then I believe we and our allies should be prepared to make clear to China that there will be a price to pay: a political, diplomatic and economic price.

If we act in concert--and I hope that that situation will never arise--we are not without resources. Noble Lords have talked about trade, and it is my earnest wish that trade with China will expand and will lead, as expanding trade should, to a cumulative increase in prosperity. But let us be realistic, as the noble Lord, Lord Wilson, said. China stands to lose far more than we do from any interruption of trade and investment flows. Both the European Union and Japan import more from China than they export to it. The United States runs a balance of trade surplus with China, it is true, but even so its exports to China are only 2 per cent. of its total exports.

Inward investment to China from the EU, USA and Japan came to 6 billion dollars in 1995. To put the point dramatically, China depends much more on trade with us and investment from us for its continued growth than we depend on trade with China or returns on our investment in China. I am talking of the aggregate. If China had no economic relations with us at all, our economic circumstances would be little affected and our unemployment might be somewhat lower--a point which is well understood in Europe and the United States.

China has all kinds of claims on the world community. It wants membership of the World Trade Organisation; it wants a renewal of its Most Favoured Nation status with the United States. It needs international acquiescence for the reunification with Taiwan; it wants to host an Olympic Games; it wants to be at every top table in economic and security matters.

These are all reasonable claims, but they need to be put in the context of an emerging single world which is not precisely a western world but is heavily influenced by western norms of behaviour--a world in which there are membership conditions. Those are not very onerous and they do not in any way diminish China's dignity or interests. Indeed, it is only if China meets those conditions that it can hope to secure the peaceful

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reunification with Taiwan. And that is particularly true of Hong Kong. China should understand that to try to rule Hong Kong without the consent of its people will produce social and economic turmoil and complicate every aspect of its relations with the rest of the world.

In 1997, China will not be liberating a victim of colonialism but taking over a complex, sophisticated society in which economic prosperity and stability are intimately interwoven with the rule of law, uncorrupt administration, personal liberty, freedom of assembly and speech and local institutions set up to underpin those things. For Hong Kong, prosperity and freedom are indivisible. So I beg those who want prosperity not to give up on freedom.

7.30 p.m.

Baroness Dunn: My Lords, the initiative of my noble friend Lord Willoughby de Broke in tabling this Motion gives Members of this House the chance to take stock of how Hong Kong is doing in the final run-up to the historic transfer of sovereignty in 1997. The continuing concern for the well-being of Hong Kong on the part of both Houses of Parliament is always deeply appreciated in Hong Kong.

It is 12 years since the Sino-British Joint Declaration settled the question of Hong Kong's future. In that time Hong Kong continued to prosper, to invest its capital and skills in China's economic growth, to develop its political institutions and to localise its Civil Service.

As I have said before in this House, the transition was never going to be easy. It is perhaps inevitable that the incoming and outgoing sovereigns will differ on some aspects connected with the long and complex process of transfer. At the same time, it is to be expected that the spotlight of the international media on Hong Kong as 1997 draws near will inevitably encourage agitation from pressure groups and individuals with their own agendas.

I have no doubt whatsoever that China's leadership remains committed to maintaining Hong Kong as a separate, Special Administrative Region with its own autonomous social, economic and legal systems. It is in China's own interest to do so.

I also have no doubt that the Hong Kong people are determined to make the Sino-British Joint Declaration a success. They have a proven track record of resilience, enterprise and pragmatism. They are driven on by confidence in themselves and in their own government--in Hong Kong's systems, which give everyone who is willing to work hard a fair chance to improve his lot. But confidence is a delicate flower, and it needs to be nurtured.

I have been concerned about the cumulative effect on confidence in Hong Kong of the continued political wrangling between Britain and China. There is no point in apportioning blame. However, with little more than a year to go before sovereignty transfers, the overriding objective of both governments must surely be to achieve a smooth transition for Hong Kong from a British colony to a Special Administrative Region of China.

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Hong Kong people have the right to expect the closest possible co-operation between Britain and China to achieve that aim. Instead, they are subjected every day to unsettling political debate--over the provisional legislature, the role of the Civil Service in relation to the incoming regime and even over the protocol of the historic handover.

I am particularly concerned about the impact of all this upon the morale of Hong Kong's outstanding civil servants, whom previous speakers have already mentioned. They have a special role to play in ensuring continuity beyond 1997, in assisting a smooth transition and in maintaining stability. Their task as part of the Executive over recent years in handling the new relationship with Hong Kong's elected, more assertive legislature has been difficult enough, and we all pay tribute to the way in which they have managed it. But they cannot be made the political football whenever British and Chinese diplomats clash.

Hong Kong's Civil Service, like those in most administrations, has always been non-political. That is a great strength and a stabilising factor in a changing society like Hong Kong. These able and devoted men and women with life-long career commitments cannot be expected to be at the beck and call of two political masters in these last months. Britain and China need to be particularly sensitive to the unique anxieties of civil servants. And, above all, I agree with the noble Lord, Lord Wilson of Tillyorn: they must not place civil servants in the invidious position of having publicly to take sides.

I am also concerned about the impact of recent events on the confidence of investors. I have said time and again that the ultimate safeguard for Hong Kong is its economic contribution to China which its buoyant economy guarantees. We all know only too well that nowadays capital can move around the world at the speed of a telephone call or the push of a computer button. A serious disagreement between China and Britain could so easily trigger a flight of capital. And so could fear of disagreement.

There are already warning signs. A report by Merrill Lynch to its clients this month concludes with these words:

    "It is not necessary to be starry-eyed about China to see the force of the arguments for optimism about Hong Kong's long-term future as part of China. But the negative factors relating to the mechanics of transition seem set to cause some significant jolts to confidence in the weeks and months ahead...We are revising our strategic view of the Hong Kong market to a neutral position on a three month outlook".

In addition, there are increasing concerns among investors that Chinese bureaucrats might be tempted to interfere with Hong Kong's commercial life and to influence commercial decisions which lie strictly within Hong Kong's promised autonomy. One of Hong Kong's main attractions to investors is its reputation as a free, fair and clean place to do business. That hard-earned status must not be put at risk.

The basis of Hong Kong's future is "one country, two systems", with a high degree of autonomy, a far-sighted concept put forward by Deng Xiaoping. For that concept to work, the people of Hong Kong must be trusted with

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that autonomy. In these remaining months it is right and necessary that people at all levels be encouraged to have contacts with China without their loyalty being called into question.

By the same token, although Hong Kong people have lived under British rule and have learnt from the British and prospered under the British, that does not mean that they have become British or agents for the British. They have retained the distinct culture, manners and outlook of Chinese people wherever in the world they go. They are proud of their heritage and the values that have come down to them through 5,000 years of history.

When the Sino-British Joint Declaration was signed in 1984, Hong Kong's GDP per capita was over 6,000 US dollars; today it is over 23,000 US dollars. Its legislature was then wholly appointed. Today it is wholly elected. Its senior Civil Service was largely expatriate. Today it is nearly all Chinese. Its contacts then with China were largely family visits. Today in South China alone there are some 25,000 Hong Kong owned factories employing more than 3 million people. It is to the credit of the Hong Kong people that such mammoth progress in only the past decade has been achieved with dignity and responsibility and without any upheaval. There is every reason to believe that they will work as fervently and robustly for Hong Kong after 1997 as part of China.

Like my noble friend Lady Thatcher, I remain today, as on previous occasions when this House has heard me, an optimist, convinced that Hong Kong will continue to be a success story. But I would end with this obvious point: the calmer the seas, the safer will be the passage.

7.41 p.m.

Lord Marlesford: My Lords, when my noble friend Lord Willoughby de Broke put down this question for debate, there was some consideration whether it was helpful to have this debate at all, particularly in the context of what the noble Baroness, Lady Dunn, described as the atmosphere of unsettling political debate during the past few months. However, the speeches we have had so far in this debate from people who have enormous knowledge and understanding of all matters connected with Hong Kong, not only reflect great credit on your Lordships' House and its tradition whereby people do not speak unless they have something worth saying, but also could be of great help in resolving some of the problems. In the light of the people who have spoken before, it is with great diffidence that I venture to contribute. In doing so, I should declare an interest as an adviser to John Swire and Sons.

I should like to focus on one or two of the misapprehensions which have led to some of the embryonic problems--misapprehensions which can, by being better understood, perhaps lead to some solution and some amelioration of the effect.

First of all, I agree with Baroness Dunn that the leadership of China is wholly sincere in their intention to fulfill the main objective of the 1984 agreement for one country and two systems. In so far as there are

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problems coming from the behaviour of Chinese officials, it is a great deal lower down than the Chinese leadership.

I recognise that of course China is cross with Mr. Patten. I would echo what my noble friend Lord Skidelsky said, which is to highlight the sincerity of Mr. Patten in what he sought to do. In its simplest form, it was, as my noble friend said, to meet the new condition in which Hong Kong will no longer have Westminster to ensure that the people are not ill-treated, either by the local Hong Kong government or with the connivance of the government from Whitehall. I believe that the real objective of introducing an independent legislature was to strengthen the people of Hong Kong in their ability to draw attention to the need for proper treatment. I recognise that the way in which Mr. Patten set about it has greatly irritated China. Perhaps they are not accustomed to the enormous political charm and talent with which Mr. Patten goes about his business. Indeed some people in this country found it hard to get used to. But that said, I hope that in spite of the irritation which China feels with Mr. Patten, and which I can understand, that China will not feel it necessary to take this out on Hong Kong. Hong Kong is much too important to China for them to do that. I hope that they will look much more objectively.

I agree with the noble Lord, Lord Wilson of Tillyorn, that it was regrettable that a decision has apparently been taken to scrap the elected legislative council and put in its place a provisional council nominated by the Preparatory Committee. I would suggest that when the time comes to make those nominations, the situation could be ameliorated by including on the provisional council a number of people who are on the present elected legislative council.

There are certain things I believe that Hong Kong is not really about. I do not think Hong Kong is really about loyalty to governments, let alone foreign governments. To people in Hong Kong, government is a back drop, it is a necessary back drop. It is something which does not interfere in their lives. They expect good government but they do not feel a personal loyalty to some foreign power. By raising this loyalty issue, damage is being done and unnecessary problems are being created particularly for the civil service. I agree, with respect, with the noble Lord, Lord MacLehose of Beoch when he talks of the impressive quality through the years of the Hong Kong civil service. But their loyalty has been to the people of Hong Kong. It has not been to some foreign power as such so it is not helpful for China to start raising the question, "Are you loyal to us or are you loyal to Britain?" That is not a real factor.

Secondly there has been reference to human rights, and I respect those who have referred to this. But so far as concerns Hong Kong, human rights inside China are not a direct factor. Human rights are of course a very crucial factor for Hong Kong. So far as foreign business is concerned, for business to feel happy in Hong Kong it has to feel happy about certain factors. Human rights are very much one of those factors. Indeed, there has been concern. I heard a senior foreign businessman express the other day considerable worry that some employees of his company in China had started to

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disappear. China must recognise that there will be business worries about infringements of human rights but I do not think it is helpful for us in the context of Hong Kong to start talking about human rights in China itself.

Some of China's particular problems--and they are considerable--are to the advantage of Hong Kong. First of all the uneven economic development in China which is causing a very real problem: the rapid development of eastern seaboard and the much slower development of the inner provinces and the disparities which are now seen through television etc. in the inner areas of China. I have recently visited Shanghai. In my opinion, as a centre for international businessmen, Shanghai is still not under starter's orders as a competitor to Hong Kong. The second consequence of this unevenness of economic development is the uncontrolled and now uncontrollable movement of population to the eastern seaboard. This is profoundly destabilising and a very difficult problem for China. You only have to go to a railway station in one of the big cities of China to see huge numbers of people who have arrived in the hope of finding jobs. It is very difficult to deal with. What that certainly means is that China will be extremely firm in ensuring that there is not a similar movement of people into Hong Kong.

A third problem--and a very real one--which China recognises is the problem of corruption. Hong Kong is remarkably free from corruption at the government level. This has been done through conscious effort. It is most important, with the arrival of 1997, that there is not the corruption introduced through lower apparachiks from China. That is one of the main reasons why I believe we do need an independent legislature in Hong Kong.

The noble Baroness, Lady Dunn, referred to the fragility of Hong Kong. It has been traditional to say how important it is for China to treat Hong Kong properly if China is to have a hope of getting back Taiwan. Recently there has been an example of the reverse situation, in which some of China's political posturing about Taiwan has been unsettling for Hong Kong.

China must take account of that delicacy and fragility. That means that the leaders at the top in China must control those cadres further down. The through-train was a splendid concept. That it has been partially derailed is a danger. Frankly, it is difficult to conceive of partial derailment. When one carriage is derailed, there is a risk of derailing the whole train. I do not believe that China can pick and choose between the economic side of Hong Kong and the whole character of Hong Kong.

There is one final point to make. In 150 years--and particularly in the past 50 years--of British colonial rule in Hong Kong, Hong Kong has done staggeringly well, much to the advantage of China, and of course with China's help. We hear a lot about the importance of face in China. I do not believe that face is any more important to Chinese people than it is to anyone else. But face is traditionally more talked about there. It is not only because Hong Kong is of such importance

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economically to China that China has to do its best to make sure that Hong Kong prospers. It is also because after the past 50 years of prosperity and flourishing, just imagine the impressions if within two or three years of Chinese rule Hong Kong started to wither. I am sure that China will not therefore allow that to happen.

7.52 p.m.

Lord St. John of Bletso: My Lords, there is both a distinct advantage and a disadvantage in being the last speaker before those who wind up. The advantage comes from having been able to listen to the wisdom of so many eminent speakers and gain from their vast experience and expertise. The disadvantage arises because, by the time one comes to speak, most of what one wanted to say has already been said by other speakers. I am most grateful to the noble Lord, Lord Willoughby de Broke, for introducing this timely debate. It is timely indeed because, as the noble Lord mentioned, it has been two years since this House last had a full debate on Hong Kong. I was a little apprehensive about putting down my name, having seen the list of speakers for today's debate, as I lack experience and expertise. My experience comes from the year I spent living in Hong Kong and China before the Joint Declaration was signed and after studying Chinese law at London University, where in fact my thesis was titled "The Hong Kong Lease through the Eyes of Beijing".

With less than 500 days to go to the handover, there are a number of real or what I might even call tactical issues that will affect Hong Kong's return to Chinese sovereignty. Clearly, there are many factors leading to optimism. But some recent developments suggest that for the short term the outlook appears a little rocky. As the noble Baroness, Lady Thatcher, and several other noble Lords mentioned, I firmly believe that China is fully committed to wanting Hong Kong to succeed but does not always convey that message well. As the noble Lord, Lord Willoughby de Broke, and others have already outlined, there are strong incentives for China to do what is needful to ensure the success of Hong Kong after 1997.

I perceive a major stumbling block to a smooth transitional process and stronger Sino-British co-operation to be the lack of clear leadership in China as well as the damaging effects of China's past hostility to the British legacy. With Deng Xiaoping's ill health and the jockeying for power in China to succeed him, I believe that many senior officials in China are scared to be seen as going soft on Hong Kong.

There have been a number of common denominators in the speeches we have heard this evening. I picked out five words in particular: confidence, trust, co-operation, continuity and, of course, the buzzword "safeguards" for the people of Hong Kong. To achieve those ends, there needs to be an effective public relations exercise from China. Clearly, one of the major problems in the short term is the lack of morale and, in the words of many, the crisis of confidence not just in China but for many inward investors into China. Recent events, as the noble Lord, Lord Skidelsky, mentioned, and events such as the snub by senior Chinese officials to Frederick Fung--

24 Apr 1996 : Column 1213

who until recently was perceived as one of the accepted Hong Kong political elite after 1997 for his recent voting against the proposed provisional legislature--have been seen by many as a hard-line campaign by China to ignore its promise of "one country, two systems".

I believe that there are a number of important lessons that have been learned from what has happened in the transitional period. Much of the media coverage has focused on the ups and downs of Sino-British relations over Hong Kong. But, in my opinion, commentators have underestimated Hong Kong's ability to manage its own relationship with China. In many cases, Hong Kong has proved its ability to deal with China, even on sensitive issues.

However, having said that, it in no way implies that Her Majesty's Government and Governor Chris Patten have not played a significant role in endeavouring to achieve a successful and effective handover of Hong Kong to China. Despite the many criticisms levied against him, I have always been an ardent admirer of the Governor in his commitment to ensuring safeguards and a degree of democracy in Hong Kong. As my noble friend Lady Dunn--I am delighted she has been able to join us here today--stressed, it is important to appreciate that, in their preparations for negotiations with Britain, Chinese leaders took the basic policy decision that Hong Kong would be more useful to them as a separate economic and social entity than if it were forcibly reintegrated into China.

The propaganda campaign directed by China at Governor Chris Patten in the run-up to last year's LegCo elections led many commentators to doubt China's commitment to the high degree of autonomy promised in the Joint Declaration. It is apparent that China's anxieties and suspicions about Britain's intentions on Hong Kong have led to its aggressive approach. However, there are encouraging signs. In the past year there have been significant breakthroughs in Sino-British co-operation over Hong Kong. That has led to the resolution of several important agreements, such as the Court of Final Appeal, and, as several noble Lords mentioned, the airport financing agreements.

I firmly believe that a major issue in the whole debate in the run-up to the handover of Hong Kong to China and the prospects for the future there is the question of "face". That has not been mentioned by many noble Lords so far. China certainly does not want anyone to be able to say that Hong Kong was one of the great success stories while it was under British rule but then went "down the tubes" as soon as China took over. The noble Lord, Lord Marlesford, took up that point in his closing remarks. Hong Kong has undergone a remarkable political transformation in the past 12 years since the Joint Declaration. I think that few people would have believed it possible at the time the Joint Declaration was signed.

There is another significant point. It is also apparent that, in the past two years, China has moved from virulent public opposition to the whole idea of direct elections in Hong Kong to accepting the idea now. This sea-change in China's position has been brought about

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by the pressure of public opinion in Hong Kong and the fact that Chinese officials responsible for the transitional process could no longer use mistrust of Britain as a reason for avoiding this issue. Even pro-Chinese figures in Hong Kong have recognised the importance of a local mandate.

But there are a number of thorny issues that several of your noble Lords have raised today, some of which I shall mention briefly. A lingering problem in Hong Kong has been the Vietnamese migrants--I understand they number in excess of 20,000--who are required to be repatriated to Vietnam before the change of sovereignty. This should not be seen as a problem belonging purely to Hong Kong. Hong Kong has provided temporary abode for over 100,000 migrants over the years and has made a significant advance to the UNHCR for financing and maintenance of the migrants.

It is encouraging that the Minister of State at the Foreign Office, Jeremy Hanley, made most useful progress during his visit to Vietnam earlier this month. Can the Government give a further full reassurance that they will remain fully committed to helping to resolve the problem of the Vietnamese migrants before July 1997?

Furthermore, can the Minister give any insight as to what progress, if any, has been made with China to ensure that the United Nations Human Rights Committee continues to receive human rights reports from Hong Kong after 1997, and say whether they have achieved any progress in their negotiations with China on their plans to amend the Bill of Rights Ordnance?

Following the debate two years ago initiated by the late Lord Bonham-Carter, in which I and several other noble Lords took part, I was delighted by the Prime Minister's recent announcement that the British Government is prepared to guarantee admission and settlement to ethnic minorities if, after 3rd July 1997, they were to come under pressure to leave Hong Kong. However, as the noble Lord, Lord Willoughby de Broke, mentioned, it was couched in rather general terms. Would the Minister be more specific as to the kind of circumstances that will give rise to this concession?

My joint messages to Her Majesty's Government and the Chinese authorities from this debate today emphasise, first, the value of and the need for effective communication and co-operation--in the words of my noble friend Lord Wilson of Tillyorn, constraint and sensitivity based on trust and goodwill--and, secondly, the necessity of not rocking the boat.

As for the people of Hong Kong who are watching, listening or will be reading the contents of this debate later, I hope they will be assured, as the Prime Minister recently said, that Britain will continue to have a strong commitment to Hong Kong well beyond 1997.

8.4 p.m.

Lord Thomson of Monifieth: My Lords, as the noble Lord, Lord St. John of Bletso, has just said, this is a timely debate. We are grateful to the noble Lord, Lord Willoughby de Broke, for initiating it, but we are also conscious that it is a debate at a very sensitive time. It is just over a year now to the transfer of sovereignty,

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which will be this country's last major act of decolonisation. It is a unique transfer of sovereignty, for obvious reasons that we all know. I am sure that noble Lords will all share my wish that we do not say anything in this final year to make things more difficult for a brave and democratic governor in Hong Kong and, equally importantly, for the people in Hong Kong.

I thought the noble Baroness, Lady Dunn, put the matter in the proper perspective with her combination of realism and optimism about the future. We are now left with a very short transition period, in effect. It is true that one of the realities of that transition period is that there is a reformed LegCo existing alongside something new which that has been created by the Chinese authorities. In that sense, looking back on our debate of two years ago, what was expressed by the two distinguished former governors of Hong Kong--the noble Lords, Lord Wilson of Tillyorn and Lord MacLehose of Beoch--has in fact proved to be right. We have to recognise that the Chinese commitment to abolish the reformed LegCo is now beyond doubt.

The noble Lord, Lord Wilson of Tillyorn, was absolutely right two years ago when he reminded us that the LegCo is only one carriage in the so-called through train which has many other carriages. In that debate the noble Lord, Lord Marlesford, to whom we listened again with great interest this evening, added that the engine of the through train remains the Joint Declaration and the Basic Law, and that it is vital to try to keep those in good order.

The Prime Minister, in the very notable speech that he made in Hong Kong recently, which was referred to by the noble Lord, Lord Willoughby, drew attention to how much has been achieved under the Joint Declaration, as against the difficulties which have arisen over the LegCo. He mentioned the agreements on Hong Kong's membership of international bodies such as the World Trade Organisation; agreements on the Court of Final Appeal; agreements on the future of the defence lands and on the network of international treaties applying to Hong Kong.

I echo the words of the noble Baroness, Lady Thatcher, the author of the original negotiations, that our wisest course in the months that remain is to concentrate on underlining to China how the inter-dependence in Hong Kong of its various facets--the integrity of the Civil Service, the inviolability of the commercial law system, the academic freedom of the universities, its citizens' right to travel--all hang together. They form a seamless web essential to the continuation of Hong Kong's economic success. As Hong Kong's 7 million people generate a GDP nearly a quarter of that generated by China's 1 billion plus population, any damage to Hong Kong's economy as a world trading city will do massive damage to the whole Chinese economy. That is by far the best argument to Chinese self-interest in living up to its commitment to "one country two systems", under the Joint Declaration.

Hong Kong's role as part of China depends upon the confidence of the international trading community. The Joint Liaison Group, which has been mentioned, will

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continue to function during the critical additional transitional period--in a sense a confidence building period--until the year 2000. The guarantees in the Joint Declaration run for 50 years until 2047. Those are significant factors, and it will be the responsibility of the British Government to make sure that what the Prime Minister said about ensuring that the international community backs all those undertakings is honoured.

In the meantime, the Government have their own heavy responsibilities in confidence building. We on these Benches welcome the Government's three-quarter U-turn on the issue of wives and widows of ex-servicemen from Hong Kong. But I echo the words of the noble Lord, Lord Dubs. I am totally baffled as to why, on this sensitive and emotional issue upon which there has been so much debate, when the Government decide that they are going to make this concession they have to do it by a Private Member's Bill. We shall want a clear explanation about that from the Minister in his winding up remarks. There seem to be great advantages from the Government's point of view and the British point of view to have a wholehearted, urgent government Bill to deal with this matter.

Then there is the case of the 5,000 members of non-Chinese ethnic minorities born in Hong Kong who face the possibility of being stateless on 1st July 1997. That is an issue that my friend the late Lord Bonham-Carter made his own cause over many years, as was mentioned. The Government moved from what I always regarded as weasel words when they said that they would,

    "consider with considerable and particular sympathy",
their case for entry if under pressure to leave. They expanded on those words when the Prime Minister said that they are "prepared to guarantee"--and he repeated the word "guarantee"--entry in an emergency. I cannot believe that my colleague the late Lord Bonham-Carter would have been satisfied with those words.

Why cannot the Government now abandon their paranoia about immigration? It is a paranoia that in some ways matches Beijing's paranoia about modest democratic changes in the LegCo. Why do not the Government at this stage, as a parting gift, present those 5,000 with the right to a full British passport? After all, as the Prime Minister said, they are hardly likely to want to leave a home where the top rate of tax is 15 per cent. (paid by only 2 per cent. of the taxpayers) unless something goes badly wrong. I hope that the optimism of the noble Baroness is justified. I share it. But if something goes badly wrong the Government would have to admit them anyway. Having made that concession, why do they not reap the benefit of it, not only for themselves, but also for the reputation of this country?

The noble Lord, Lord St. John of Bletso, in his final remarks raised the case of the Vietnamese immigrants. According to the LegCo, I understand that the Government are seeking to wash their hands of the problem, saying that it belongs to Hong Kong alone. That surely cannot be right. The LegCo made a series of requests to the Government for more action and assistance. I hope that there will be a positive response.

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I am told that today the LegCo is debating an Immigration (Amendment) Bill which raises serious human rights issues inside Hong Kong. If enacted, it would make it impossible for Vietnamese asylum seekers, some of whom have been detained for years, successfully to challenge their detention in the courts. There is a danger of the Bill being rushed through the LegCo in Hong Kong in a single day. From these Benches we certainly support the call of Jonathan Daw, the legal adviser to the LegCo, seeking to delay matters until there can be proper representations from the various interested parties in Hong Kong, including representations that some of us received from an organisation called Refugee Concern.

None of those matters depends upon the decision of Beijing. They are within the power of decision of Her Majesty's Government. Within the limits of our country's freedom of action, and this very difficult situation in relation to Hong Kong, it would greatly help to sustain morale in Hong Kong and their reputation in Hong Kong were the Government to take the action I am suggesting. Besides, they are the right things to do.

8.14 p.m.

Baroness Blackstone: My Lords, unlike my noble friend Lord Dubs, who has been to Hong Kong quite recently, unfortunately it is now three years since I was there. But, like him, I feel privileged to speak in a debate in which so many of those who have spoken have so much expertise.

This is a most opportune debate, coming at a time of renewed concern about the Chinese approach to the way in which Hong Kong is governed when it ceases to become a colony in just over one year's time. That concern was reflected in a number of the speeches made this evening, and we on these Benches share it. Indeed, this has been a debate where there has been a remarkable degree of agreement on all sides.

However, we must be careful not to exaggerate the problems. China is still committed, as the noble Baroness, Lady Dunn, said, to the one-country/two-system formula which was the basis of the negotiated agreement between the UK and China on the colony's return to Chinese rule. Unacceptable though it is, China's recent announcement that it intends to set up a provisional body which will actually replace LegCo after the takeover should have taken no one by surprise.

The Chinese Government made it clear that they would not accept the reforms introduced by the Governor after talks broke down the year before last. When I visited the Ministry of Foreign Affairs in Beijing 18 months ago, I was told in no uncertain terms that was the case. Indeed, China also made it clear that it would eventually dismantle all three levels of elected government. It rejects those bodies on what it claims to be legal grounds since they were created without its prior agreement. However, some commentators have suggested that at least the existing elected members of the municipalities and the districts will be reappointed to provisional bodies. Let us hope that they are right.

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In saying that it is not surprising, I am not in any way endorsing the position China took in resisting democratisation during those earlier negotiations. Nor am I endorsing the Preparatory Committee's decision to set up a provisional LegCo. It would surely be far better, as many speakers have said, to allow the existing LegCo, which was elected on a fair and open basis, to run its full term.

The new body appears to have been constructed on the narrowest of electoral bases--just 400 people. In reality, it is an appointed body. The important constitutional questions now are, first, how we get to 1st July 1997 without unacceptable confusion between the role of the new provisional council and the existing LegCo? Secondly, how do we secure from China further commitments that after 1997 new elections will take place as soon as possible to replace the provisional council, which abide by the Basic Law and the Joint Agreement and that will not in any way renege on earlier agreements because China does not like the possible outcome of such elections? For example, China cannot be allowed to believe that manipulation of the system to exclude the democrats from elected positions would be acceptable. The Basic Law commits it to making 30 of the seats directly elected by the third post-1997 legislature and eventually all 60.

Perhaps when he replies the noble Lord opposite speaking for the Government would indicate whether his right honourable friend the Foreign Secretary referred to the timetable for elections with his opposite number in Beijing when they met recently in the Hague.

I do not often agree with the noble Baroness, Lady Thatcher. However, I share her optimism and that of the noble Baroness, Lady Dunn, in regard to Hong Kong. I remain optimistic, as I have always been and as I believe she is, that China will not be so foolish as to jeopardise business confidence in Hong Kong by initiating political change that goes back on earlier agreements and which, as such, will be unacceptable not just in Hong Kong, but also in the UK and in the international community.

My noble friend Lord Dubs and the noble Lord, Lord Marlesford, mentioned corruption. Again, I should like to be optimistic. However, there are, as a number of other speakers have mentioned, one or two signs that China has not entirely understood the importance of curbing its authoritarian tendencies. I ask the Government whether they have raised with China its treatment of Frederick Fung, who voted against the setting up of the Provisional Council. Can he confirm that it is true that Mr. Lu Ping demanded unanimity and has told Mr. Fung that he is unfit to serve on the Provisional Committee or on the committee to select the territory's first chief executive? If that is the case, have the Chinese been asked to reconsider his exclusion?

Elaborating a little on the earlier questions from the noble Lord, Lord Maclehose, can the Minister also tell the House what is the position of the UK Government on the role of the Provisional Committee up until July 1997? How, for example, will decisions about the 1997-98 budget be agreed? What can be done to prevent conflict between existing bodies and the new one? Even

24 Apr 1996 : Column 1219

though LegCo is, in some senses, the consultative arm of an executive-led government, conflict over exerting power and influence between the two bodies in the coming year could be very unsettling.

The Chinese Government's attitude towards the Civil Service in Hong Kong has been raised and is a matter of concern. There has been, as other speakers have already mentioned, a very welcome retreat from the quite unacceptable requirement that top civil servants demonstrate their support for the incoming regime by declaring that they back the new provisional LegCo. Again, as has already been said by the former Governors of Hong Kong, the noble Lords, Lord Wilson and Maclehose, the neutrality of the Civil Service must be preserved. If this were threatened, it would affect morale and put at risk the whole transition. The appointment of the first post-1997 chief executive is of the utmost importance in helping to maintain confidence in Hong Kong as well as in ensuring a smooth transition. Without saying whom it should be, she or he must have the appropriate experience, skill and intelligence, to do what will be undoubtedly a very demanding job.

Other speakers have raised the issue of the future rights of Hong Kong's ethnic minorities. Does the noble Lord speaking for the Government accept that it is already clear that these minorities will not enjoy the same rights as the ethnically Chinese majority after 1997? For example, because of the race-based nature of Chinese nationality law, they will not be able to become Chinese nationals, and only Chinese nationals will be eligible for certain political offices under the Basic Law in the post-1997 constitution.

We very much welcome the Prime Minister's pledge made when he was in Hong Kong recently to allow the ethnic minorities the right to settle in the UK, should they come under pressure to leave Hong Kong after 1997. However, I ask the noble Lord opposite to say, when he replies, whether it would be fairer to go a little further and agree to restore full British citizenship to this relatively small group. We on these Benches also strongly endorse the views expressed by the noble Lord, Lord Willoughby de Broke, and others, on this matter. We also support the point that has been made about the need for a Government Bill, not a Private Member's Bill--a point made by my noble friend Lord Dubs and by the noble Lord, Lord Thomson of Monifieth--on the widows of servicemen.

On the more general question of human rights, perhaps I may pick up the points, again made by other speakers, on the unfortunate fact that China is not a signatory to the UN covenants on civil and political rights and on economic, social and cultural rights. Hong Kong, however, has been covered by these covenants since Britain ratified them some 20 years ago. Moreover, the Joint Declaration, I believe, made it clear that they should continue to be in force after 1997, and this is embodied in Article 39 of the Basic Law. As the noble Lord, Lord Willoughby de Broke, and others have indicated, if this is to have any meaning, future Hong Kong governments must report to the UN's human rights committees. When the noble Lord opposite replies, can he reassure the House that the

24 Apr 1996 : Column 1220

Government intend putting further pressure on China to agree special arrangements for Hong Kong to make such reports? Surely, this is a minimal safeguard which the people of Hong Kong deserve. There must be procedures for the international monitoring of human rights in Hong Kong after the transfer of sovereignty.

Let me end by saying that we on these Benches have not always been in agreement with the details of the Government's handling of every aspect of the changes that have been instituted in Hong Kong nor with every minor detail of the way they have been handled by the Governor. But we share with the Government and with the governor the wish that Hong Kong should remain not only prosperous and economically successful, but that it should continue to be governed in a way that is totally consistent with the rule of law and with the freedoms referred to by a number of speakers, including the noble Lord, Lord Skidelsky, in particular, to which its people have become accustomed; and freedoms which we must ensure they continue to experience after 1997.

8.27 p.m.

Lord Chesham: My Lords, my noble friend Lady Chalker of Wallasey is extremely sad that she is unable to be here for this debate tonight. I am, too. I, too, would like to thank the noble Lord, Lord Willoughby de Broke, for initiating this debate. Hong Kong has always, and will always, occupy a special place in the knowledge and affections of this House. Again, the range and quality of the contributions from all sides of the House this evening have confirmed that. They included contributions from two distinguished former Governors of Hong Kong and from the former British Prime Minister who signed the Joint Declaration. They have amply justified my noble friend's initiative in bringing the subject of Hong Kong's future before us. I pay particular tribute to the contribution to our deliberations by the noble Baroness, Lady Dunn: her wisdom and experience in these matters are unrivalled.

As has been stated, it is some 700 days since our last full debate devoted to Hong Kong in May 1994 and much has happened in Hong Kong in that time. I expect that at least as much will happen in the 400 days or so remaining until the transfer of sovereignty.

As other noble Lords have done, before looking forward to the handover and beyond, I shall go back just a little to what has been achieved in and for Hong Kong since our last debate. At that time, in May 1994, LegCo had not finally decided the arrangements for the final cycle of elections under British rule. The arrangements which it then adopted were, and are, fully consistent with the Joint Declaration and the Basic Law and the other agreements and understandings between Britain and China. They were duly implemented in elections to the district boards in September 1994; in the elections to the two new municipal councils in March 1995; and, most significantly, in the elections to the Legislative Council itself last September. In all three sets of elections more Hong Kong people than ever in the

24 Apr 1996 : Column 1221

territory's history registered to vote and more than ever turned out on polling day and exercised their democratic choice.

The success of those elections and of the representative assemblies they produced in contributing to the governance of Hong Kong make it all the more regrettable that China has indicated that those elected to serve on those bodies will be replaced in 14 months' time. In the case of LegCo, China's plan is apparently to put a provisional legislature in its place. Neither the Joint Declaration nor the Basic Law provides for any such body. We have made it clear to the Chinese, both in public and in private and from the highest levels, that we see no reason for this. We consider it would be a reprehensible and unjustifiable step for China to take. We believe that the members of LegCo duly elected on 17th September should be allowed to serve their appointed four-year term.

My right honourable friend the Prime Minister stressed those points to Premier Li Peng in Bangkok on 29th February. My right honourable friend the Foreign Secretary did the same with the Chinese Foreign Minister in The Hague on 20th April. Vice-Premier Qian Qichen confirmed that until 1st July 1997 China accepted the sole authority of the Governor, LegCo and the Privy Council with regard to the government of Hong Kong. But we look to China to show that the promise of Hong Kong people ruling Hong Kong will be honoured in the spirit as well as in the letter. As the handover approaches, it is inevitable and right that Hong Kong people should look increasingly to the incoming sovereign power for reassurance about their future. As Hong Kong turns to China, so I hope that China will listen to the Hong Kong people--to all Hong Kong people, including those whose views China does not much care for.

I have already referred to the meeting which my right honourable friend the Foreign Secretary had with the Chinese Foreign Minister last Saturday. Apart from the provisional legislature, one of the most important subjects covered in their discussions was continuity in the Hong Kong Civil Service--something which I am sure the whole House agrees with, as has been stated. I am sure that this is vital for Hong Kong's future success. Vice-Premier Qian told the Foreign Secretary that China hoped that all civil servants would stay on to serve the Government of the Hong Kong Special Administrative Region, and reaffirmed China's commitment to a politically impartial civil service. The two Ministers also agreed that civil servants should remain loyal to the Hong Kong Government before 1st July 1997 and to the SAR Government thereafter. That important statement has already been widely welcomed in Hong Kong.

I would just like to mention here that I am pleased that earlier today the Queen in Council made two orders under the Bill for the payment of compensation; that is, the Overseas Public Servants Act, as it is now. That is compensation by the British Government to Hong Kong overseas officers. The orders will also allow the Governor to permit them to take early retirement. I am sure that this news will be welcomed by the officers concerned.

24 Apr 1996 : Column 1222

Many of those who have spoken today have placed our policy on Hong Kong in the wider context of relations with China. We will not hesitate to speak openly and frankly on matters like the future of LegCo. But, wherever possible, we believe it our duty to try to reach solid and lasting agreements with China which will safeguard Hong Kong's future stability and prosperity.

Overall, we have achieved some improvement in our relations with China. My right honourable friend the Deputy Prime Minister visited China in May last year in his previous capacity. He will do so again next month, travelling on to Hong Kong. I can confirm to my noble friend, Lord Willoughby de Broke that Hong Kong will be high on the agenda at those meetings with the senior Chinese officials. In the past six months my right honourable friend the Foreign Secretary has had no fewer than three meetings with the Chinese Foreign Minister.

This engagement with China, which extends to all levels, is important in its own right between two permanent members of the UN Security Council. It is also important to secure practical, positive results for Hong Kong in the last year or so of British rule. Let me give some examples.

In June 1994, we reached agreement with China on the future of the military estate, enabling the Hong Kong Government to sell for development real estate worth some 65 billion Hong Kong dollars. In November that year we at last reached agreement on financial arrangements for Hong Kong's magnificent new airport. As my noble friend Lord Willoughby de Broke said, Hong Kong is an extremely important regional training centre and has the world's busiest container port. The expansion of this port is vital for the continuing prosperity of Hong Kong and the wider region. Therefore, we very much welcome the Chinese Foreign Minister's agreement during the Foreign Secretary's visit to Peking in January that China would accept whatever arrangements the consortia agreed among themselves on the redistribution of stakes in container terminals 1 to 9. The consortia are now holding extensive discussions to this end. We hope that they will find an early solution.

In June 1995, we agreed with China on setting up a Court of Final Appeal for Hong Kong which will fulfil the role now performed by the Privy Council here in London. We have also reached a large number of agreements on mainly technical issues, all of importance for Hong Kong's future prosperity. This year the Joint Liaison Group will hold four rather than three plenary sessions, a measure of both sides' determination to complete the transition agenda.

All this painstaking and persistent work has rested on the firm foundation of the Sino-British Joint Declaration of 1984. The principles which it enshrines in treaty form--of Hong Kong enjoying a high degree of autonomy and its current social and economic systems, rights and freedoms for 50 years after the handover--govern all our exchanges with China. The Chinese Government have regularly repeated their commitment to the Joint Declaration. Meanwhile, Hong Kong has

24 Apr 1996 : Column 1223

prospered, as has been mentioned by many noble Lords here. It has been a wonderful example of how hard work and sensible attitudes can be so successful.

I would like to turn now to try to cover as many of the points raised by noble Lords as possible. However, if time runs out on me, I shall certainly write to them on any matters that I have not been able to cover.

The noble Baroness, Lady Dunn, mentioned Chinese interference in Hong Kong's economic autonomy. We believe that a level playing-field for business is one of Hong Kong's strongest assets. It is imperative for Hong Kong's continuing prosperity that nothing is done to undermine this and that Hong Kong enjoys the high degree of autonomy promised in the Joint Declaration. We welcome recent Chinese reassurances on these points.

A number of noble Lords, including my noble friends Lord Willoughby de Broke and Lord Skidelsky and the noble Lord, Lord St. John of Bletso, mentioned human rights, as did the noble Baroness, Lady Blackstone, in relation to the International Covenant on Civil and Political Rights. The Bill of Rights ordinance which implements in local law the provisions of the International Covenant on Civil and Political Rights is entirely consistent with the Joint Declaration and Basic Law. We have expressed our serious concern over the proposals made last year by the preliminary working committee to amend the Bill of Rights ordinance and to reinstate earlier versions of six other ordinances which were amended to ensure that they were in line with the Bill of Rights. My right honourable friend the Foreign Secretary urged the Chinese Foreign Minister to leave this issue to the Special Administrative Region Government to decide in due course.

We are in no doubt that China is obliged under the Joint Declaration to ensure that the provisions of the international covenants as applied to Hong Kong remain in force. That includes the requirement to report to the UN treaty-monitoring bodies, as mentioned by a number of noble Lords. We are continuing to urge China to accede to the covenants and to press the Chinese on how China will report on the Hong Kong Special Administrative Region. My right honourable friend the Foreign Secretary raised this issue with his Chinese counterpart during their meeting on 20th April.

A number of noble Lords were asking about the assurances to and the situation of ethnic minorities. My right honourable friend the Prime Minister, as has been stated, announced in Hong Kong that we would guarantee to members of this community admission and settlement in Britain in the unlikely event that they came under pressure to leave Hong Kong after the transfer of sovereignty. This commitment reinforces the Government's existing commitment to this group and will remove any doubts that may exist about whether they would be admitted to Britain. This group, whose families have been in Hong Kong for many generations, want to remain in Hong Kong. We believe that this reassurance will give them the confidence that they need to stay there.

The noble Lord, Lord Thomson of Monifieth, and the

24 Apr 1996 : Column 1224

noble Baroness, Lady Blackstone, mentioned statelessness. No member of the community will be stateless after the transfer of sovereignty. They can apply for a BNO passport before 1st July 1997. If they do not and would otherwise be stateless, they will automatically become British overseas citizens. Moreover, their position in Hong Kong is secure. The Joint Declaration and the Basic Law guarantee their right of abode in the Hong Kong Special Administrative Region after the handover. There have been suggestions, including recently--

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