Hong Kong accord nears completion.

Britain and China are on course to conclude an agreement about the future of Hong Kong before the end of the year. The assumption in both London and Peking is that the agreement will be approved by Parliament and the great majority of the territory's population.

The text of a draft agreement has been considered by the British Cabinet. It proposes detailed arrangements for the administration of Hong Kong after sovereignty reverts to China on July 1, 1997.

Both governments were expected to initial the agreement by the end of this month. Key elements of the deal are believed to be:

* A declaration that sovereignty over the territory and its population of more than 5 million will pass to Peking in 13 years.

* A formula for ownership of land that will protect the property rights of Hong Kong citizens.

* Retention by the territory's future administration of key aviation rights.

* An agreement on citizenship of Hong Kong residents after 1997.

Negotiation of the package has taken nearly two years of sometimes sharp encounters between British and Chinese officials. But there were some important issues that could not be negotiated and will have to be dealt with bilaterally between London and Peking in the run-up to the transfer of sovereignty. Unresolved questions include:

* The exact role of a proposed Anglo-Chinese liaison group intended to smooth relations between the two governments in the period before 1997. The Chinese say they will not try to interfere in the territory's administration, but some Hong Kong officials doubt this.

* Whether there will be internal democracy in Hong Kong after 1997. Britain wants firm assurances that there will be, but the future intentions of Peking are unknown on this point.

Despite these doubts, the feeling in London (and especially in Parliament, which will be called upon to ratify the agreement, probably in November) is that the deal is the best available under the circumstances.

Particular weight is being attached to Peking's promise to retain Hong Kong's capital structures for 50 years after reversion of sovereignty. Without this promise, no agreement would have stood a chance of acceptance by Parliament at Westminster.

Before Parliament votes, an ''assessment mechanism'' will be used to test the feelings of Hong Kong's residents and special interest groups. In London the government of Prime Minister Margaret Thatcher has no serious doubt that a majority will accept the territory's future designation as a ''special administrative region'' of the People's Republic of China.

After the result of the public opinion test is known, both houses of the British Parliament will debate the agreement and vote on it. There will then be a signing ceremony, probably in December in Peking, which it is thought likely Margaret Thatcher will attend.

As part of attempts to improve the atmosphere of contacts between Peking and London after the agreement is signed, it has been decided that Queen Elizabeth II will make a state visit to China - the first by a British monarch.

The Queen is expected to make the trip some time in 1986, and will also call at Hong Kong.

Casting their eyes over the agreement as it stands, British and Hong Kong officials see aspects which may cause genuine regret.

Chinese troops will probably be put on security duty in Hong Kong after 1997, and Peking will cease to recognize the long-term validity of British passports held by residents of the territory.