}
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A
B
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should propose official talks forthwith to prod the Chinese into
facing the problem.
The Governor, His views are at Flag A.
however, argues that a premature request for talks might invite
a rebuff and that the Chinese will act only when the consequences
of inaction are made manifest. He feels that talks should be
proposed only if Deng shows clear appreciation of the problem
and its urgency. The Governor's views are at Flag B.
Argument
6.
Handling.
The Governor and the Ambassador have pronounced
views on how the subject should be handled. We cannot discount
the Ambassador's argument that Hong Kong's economy may slide as
a result of procrastination. But, the Governor takes the view
that we should get a reasonable period of warning of such a slide,
which would allow us the latitude we need to get the timing of our
approach right. He must be the best judge of this. We should be
ready, however, to change our tack should circumstances in Hong
Kong require it.
7.
The land lease problem, while not the only factor affecting
confidence, has become something of a symbol in Hong Kong. As
the Governor and the Ambassador point out, the Secretary of State
could hardly go to Peking now and not raise the related matters of
confidence and land leases. But we must take care not to connect
leases too closely with the longer term. Evidence is that the
Chinese are wary of this, and earlier hopes that their stake in the
Tin Shui Wai project might lead to agreement on a new type of lease
have thereby foundered.
8.
Level of Approach. The Secretary of State is bound to mention
these problems initially to his host, the Foreign Minister, but the
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