A NEW Hong Kong could be created on the west coast of Scotland to

provide the colony's residents with a haven from the Chinese takeover,

according to a radical plan put forward yesterday.

Coastal sites in Wales or Cumbria are other possible options for a new

colony, says the right-wing think tank, the Adam Smith Institute.

It says Britain has a moral responsibility to help those among the

3,200,000 British passport holders frightened that recent events in

Beijing may be repeated after the 1997 handover.

There is no room in Britain's congested towns and cities and other

countries would be unlikely to take a large number of refugees, argues

the institute's domestic policy adviser Mr Douglas Mason.

The answer is to allow Hong Kong residents who want to leave to

duplicate their enterprise economy in a brand new colony in a

sparsely-populated coastal site in Britain.

In a booklet out yesterday called A Home for Enterprise, Mr Mason --

whose report on the poll tax in 1983 formed the basis for the

Government's community charge -- suggests Wales, Cumbria, or Scotland.

Scotland would be particularly appropriate given its long history of

liberal economic thought, its record of racial tolerance, and its strong

economic growth, he says.

The 150 to 200 square miles needed would make little impact on

Scotland's extensive Atlantic seaboard, adds Mr Mason, currently in Hong

Kong researching the idea.

If half of those understood to be opposed to coming under Chinese rule

chose to emigrate to Scotland, that would mean around one million people

requiring more than 300,000 new homes, the report adds.

More than half the finance would come from the families themselves, Mr

Mason estimates, but around #500m a year would be needed until 1997 to

provide homes to rent for the rest.

Another #500m would be required for infrastucture such as roads and

utlilities and another #250m for industrial, commercial and community

facilities, in which the private sector would participate.

Any state money needed would be small compared with annual public

expenditure running at some #200m and some of the capital cost should be

borne by the Hong Kong government, the report suggests.

The Scottish Nationalist Party dismissed the idea, accusing the

institute of regarding Scotland as a ''wilderness.''

But the small west coast island of Colonsay, population 114, showed a

keen interest in the idea and said: ''Very interesting. Tell us more.''

In Edinburgh, SNP spokesman Mr Chris McLean said: ''It betrays the

total contempt shown by people like the Adam Smith Institute if they

view us as an unspoilt wilderness suitable for colonisation.

''We do feel very strongly that the UK should honour its obligations

to Hong Kong British citizens. But to suggest you should dump them on

some offshore island on the west coast is ridiculous.

''What is needed is for the UK and other countries to collectively

look at how to honour their obligations, and we would like Scotland to

play a part in that.''

A Home for Enterprise, by Douglas Mason is available from the Adam

Smith Institute, PO Box 316, London SW1P 3DJ, price #9.