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THE ORIGINAL HAS BEEN RETAINED IN THE DEPARTMENT UNDER
SECTION 3 (4) OF THE PUBLIC RECORDS ACT 1968
plan in the face of this very negative Chinese reaction.
6. This is a setback but not a disaster: the problem is
not yet urgent and little will be lost by failure to tackle
it now. But it will not go away; on the contrary it will
become acute within the next few years if nothing is done.
So we will need to consider alternatives to the solution which
the Chinese have rejected.
7.
reasons for the Chinese response. On present evidence it seems
likely that they include one or more of the following:-
a) An assessment that the problem of maintaining confidence
in Hong Kong is not yet serious and can safely be postponed.
b) Failure to understand the need for British legislative
measures as opposed to general Chinese assurances.
c) An unwillingness to allow the British and Hong Kong
Governments to take the lead in any matter affecting--
the future of Hong Kong.
d) Concern about reactions abroad and, in particular, the
implications for their handling of the Taiwan problem
and negotiations with the Russians on border territories
ceded under the "Unequal Treaties" of the 19th Century.
8. It will be necessary to decide what, if any, response should
be made to the Chinese and, in particular, how the subject should
be handled during Premier Hua Guofeng's visit at the end of next
month. The Ambassador and the Governor have made recommendations
and I shall be submitting separately. In the meantime it is
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