Britain is alarmed that China may be about to win hands down in negotiations over Hong Kong. At the end of July, Foreign Secretary Sir Geoffrey Howe is to visit Britain's last remaining colony in Asia as well as Peking in an attempt to reassert the British bargaining position. A Foreign Office minister, Richard Luce, already made an unscheduled trip to Hong Kong last week with orders to try to restore the morale of the business and administrative communities.
Negotiations over Hong Kong opened nearly two years ago after China said that it wants to regain sovereignty after 1997, when leases on most of the territory run out.
In the past few weeks Peking's negotiators have raised the stakes by demanding that a joint commission be set up to supervise the 13-year transition. This proposal heavily undercut the morale of Hong Kong's 5 million residents and gravely embarrassed London where a joint commission is seen as a shrewd attempt by China to run Hong Kong ''via the back door'' until 1997.
China's decision to demand a joint body came from the country's top leader, Deng Xiaoping. Immediately, Britain's governor in Hong Kong, Sir Edward Youde, flashed a danger signal to London - that business confidence in Hong Kong had slumped because it was perceived that the Chinese had proved smarter negotiators than the British.
Sir Geoffrey's hastily arranged visits to Peking and Hong Kong are part of an attempt to regain the negotiating initiative before September, when the Chinese say they expect an agreement to be initialed.
Britain has vacillated somewhat in its negotiating position. For instance, the British government once argued that the House of Commons in London would demand rock-solid safeguards for the future of Hong Kong. But when Parliament debated the question, politicians of all parties gave the impression they were keen to accommodate to Chinese demands.
The only worry the House of Commons appeared to have then was that, if a bad agreement resulted, 1 1/2 million Hong Kong residents might demand the right to enter Britain.
Deng Xiaoping was swift to read the signs in London and started to raise new demands, including the insistence on a joint commission. He even asserted that troops of the People's Liberation Army could be posted to Hong Kong when Peking regained sovereignty.
Ever since the balance has tipped in China's favor, and Hong Kong residents have shown signs of bitterness about Britain's handling of the negotiations.
Some of Mrs. Thatcher's advisers are saying the Chinese must be told that unless they drop their demand for a joint commission, there will be no agreement.
A more moderate group of officials say there should be a series of joint committees on subjects such as trade, currency, commercial activity, and industrial development. The idea is that the Chinese influence in the transition period would be suffused and government ''through the back door'' made impossible.
Sir Geoffrey's mandate is to try out some of these ideas on both the Chinese government and the Hong Kong business and administrative communities.