.5.

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problem was that, as 1997 approached, uncertainty about new leases grew. The Governor had later made some proposals which the Chinese

Government had found unacceptable. The British Government would not. pursue these, since any proposals had to be acceptable to both sides. But he would be grateful if Premier Hua could give thought, or cause thought to be given, to the problem of maintaining confidence in

Hong Kong's future. It was not in the interests of China, or of Hong Kong, that uncertainties about this should put the future of Hong Kong into jeopardy, and affect investment confidence there. The Prime Minister said that the British Government did not expect

an answer on the spot, but were asking the Chinese Government to give

thought to the question.

Premier Hua replied that the Chinese Government had given

serious thought to this question, and had given their reply to the British Government. They had to be very careful about what was

said about Chinese territory. On the other hand, the Chinese

Government had very good relations with the British Government, and

with the British authorities in Hong Kong. At his press conference

before his departure from China for Western Europe, he had answered questions on Hong Kong, and, so far as he was aware, the

reaction had been favourable. It had been noted that the Chinese

Government would keep in touch with the British Government and

would take account of the anxieties of investors even after the

problem had been resolved.

The talks concluded at 1710. In the presence of the Prime Minister and Premier Hua, the Cultural Agreement was then signed by the Secretary of State for Foreign and Commonwealth Affairs and the Chinese Minister of Foreign Affairs; and the Air Services Agreement by the Secretary of State for Trade and Vice-Premier

Yu Qiuli.

5 November 1979

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CONFIDENTIAL

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