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DESKBY 300100Z

FM FCO 291600Z JANUARY 82

TO IMMEDIATE JAKARTA

TELEGRAM NUMBER 104 OF 29 JANUARY

REPEATED TO IMMEDIATE DEDIP MANILA,

AND TO IMMEDIATE DEYOU HONG KONG (PERSONAL FOR GOVERNOR)

FOR PRIVATE SECRETARY

34

YOUR TELNO 1 TO MANILA : MEETING WITH Y K PAO

BACKGROUND

1. PAO HAD A PRIVATE MEETING WITH THE PRIME MINISTER ON 17

DECEMBER. (PLEASE TREAT AS PARTICULARLY CONFIDENTIAL).

2.

PAO'S MAIN POINTS WERE:

A) THAT GU MU, CHINESE DEPUTY PREMIER, MIGHT BE INVITED TO THE

UK, PERHAPS IN FEBRUARY:

B) THAT CONSIDERATION SHOULD BE GIVEN TO THE IDEA OF HMG OFFERING THE CHINESE SOFT LOANS WHICH MIGHT BE LINKED TO THE FUTURE OF

HONG KONG.

3. PAO LATER CLAIMED, IN CONVERSATION WITH THE GOVERNOR IN HONG KONG (PLEASE PROTECT), THAT HE HAD BEEN ASKED BY GU MU AND HUANG

HUA TO ACT AS AN INTERMEDIARY.

4. WE ARE CAUTIOUS ABOUT PAO'S CLAIMS AND THERE MAY BE CONFUSION

BETWEEN HIS REPORTS OF CHINESE VIEWS AND HIS INTERPRETATION OF WHAT

HE BELIEVES THEY MEAN. WE HAVE GIVEN HIM NO ENCOURAGEMENT TO

REGARD HIMSELF AS A CHOSEN INTERMEDIARY.

see

tached to (33

5. FROM A LETTER PAO SENT TO THE PRIME MINISTER ON 13 JANUARY HE APPEARS TO THINK THAT GU MU (AND HIS WIFE) WILL BE INVITED THIS

YEAR. IN HER REPLY OF 25 JANUARY THE PRIME MINISTER HAS TOLD PAO THAT THERE IS AN OPEN INVITATION TO GU MU ISSUED IN 1980. THIS WAS RENEWED IN GENERAL TERMS BY MR PETER REES IN DECEMBER AND THE

TERMS attached is

1

DEDIP SECRET

/LPS

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