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To be honest I think that the Chinese government would not care or actually be quite OK with it.

Indeed, who would leave HK? Arguably the anti-CCP, the "troublemakers". So that'd mean less 'trouble' in HK and there is a large supply of mainlanders happy to move to HK.

Obviously the Chinese government will officially be outraged but privately they may think good riddance.

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Talking to a Chinese friend who is quite pro-CCP, they are pissed that UK is offering this and say that mass emigration of HKers would be a major loss of face for the CCP.

Yes, but that does not mean there would not be a silver lining.

This offer of residency is political and possibly symbolically negative for China, but in practical terms it does not hurt China at all.

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