THE proposed establishment of a shadow government next year is a deeply disturbing development. It unequivocally breaches the Joint Declaration and will cause great unease, both within the civil service and throughout Hong Kong. The proposal is not yet set in stone. So far it has emerged only in a speech to the Hong Kong Management Association by the Preliminary Working Committee member, Sir Sze-yuen Chung. The speech appeared to be Sir Sze-yuen's manifesto to prove his credentials for selection as chief executive-designate next summer. But mainland officials were unwilling to repudiate it yesterday and experience has shown such unsavoury ideas are rarely put forward in public by Beijing's allies unless they have already been approved in private by the central Government. That has consistently been the pattern - from the provisional legislature to the emasculation of the Bill of Rights - so the same must be assumed to be true in this case unless there is a firm indication to the contrary. It remains unclear how the setting up of a provisional government secretariat as early as the end of next year can be justified. Certainly it is impossible to reconcile with the Joint Declaration which clearly states that Britain remains 'responsible for the administration of Hong Kong' until June 30, 1997. Even Sir Sze-yuen was forced to admit that the move 'could create some concern in Hong Kong and particularly in the British Hong Kong Government'. That is putting it mildly. Confusion If the plan were implemented, one immediate effect would be to shatter the agreed arrangements for a transitional budget. Instead, it now seems that the shadow government will prepare a separate Special Administrative Region budget, to come into effect on July 1, 1997. This will cause financial confusion. Even more destabilising will be the economic uncertainty caused by not knowing who is in charge during the final six months of British sovereignty. Civil servants will be the worst affected. They will be placed in an impossible position: forced to report to two masters and unsure whose orders to obey. Some will have to work alongside those designated to replace them. Many may prefer to resign, rather than undergo such a demoralising experience. The mere existence of a provisional government casts strong doubt on the Basic Law's assurances that all civil servants, save for a few principal officials, can remain in position beyond 1997. If that were really the case, there would be no need for a second secretariat to begin shadowing their work even before the handover. Still more worrying is where its staff of several hundred will come from. Beijing might pressure Britain to second civil servants from Lower Albert Road. But it is unlikely that the Hong Kong Government would agree, let alone be able to persuade the soon-to-be-defunct Legislative Council to approve the funds. Suspicion In any case, the proposal for a shadow government reflects such deep-rooted suspicion of the present administration, and those who work in it, that China would be unlikely to trust serving civil servants to run its rival secretariat. Sir Sze-yuen's remarks warning that Britain may try to pressure the chief executive-designate into backing policies which Beijing has not endorsed opens the door to the unpleasant prospect of the body being staffed by mainland cadres, who could be counted on to guard against deviations from the party line. The mainland officials appear to be available: this, and other newspapers, have reported that hundreds of hand-picked cadres are being trained at secret centres in Beijing and Shanghai for deployment here. Yet any such plan would render meaningless the concept of 'Hong Kong people ruling Hong Kong' which underpins both the Joint Declaration and Basic Law. Such fears show how damaging even the prospect of a shadow government will be, to Hong Kong and to China, which would inherit a more chaotic and divided territory than would otherwise be the case. There is no reason why this need happen. The Hong Kong Government is now almost entirely run by locals, many of whom have not accepted the protection of foreign passports because they want to play a part in this historic step in the reunification of their motherland. It is absurd to suggest that they would put Britain's interests ahead of those of either Hong Kong or China. Since the establishment of a provisional government has so far been floated only by Sir Sze-yuen, there remains hope that China might be persuaded the plan is wrong in principle and unworkable in practice before becoming openly committed to the idea. But that can happen only if the community unites against this misguided proposal.