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operating; but he might have said that it would be 'very difficult'

if Rowe had directly asked him whether there would be problems

in this area.

8.

In these circumstances I do not think that Huan's conversations

with Rowe represented a firm indication of a new Chinese line.

But they are still disturbing because:

9.

X

(a) they add weight to other recent reports indicating that

the Chinese leaders envisage more of a mercenary than a directing

role for the British after 1997; there are strong indications

that they place political requirements before economic considerations.

(b) they suggest that the Chinese see political change taking place

sooner rather than later (e.g. in the five years leading up to

1997).

I agree with HMA Peking's suggestion (Peking tel No 293,

paragraph 7) that it would be useful to try to draw Huan out on his

talks in Australia and Hong Kong. On the other hand, contrary to

HMA's view and that of the Governor (Hong Kong tel 543, paragraph 4)

I do not believe that HMA Peking should disclose prior knowledge of

Huan's remarks which were passed to us in strict confidence.

Even if the Australians agree to our making use of these, this would

not be in our interests. We would give the impression to the Chinese

that we were opening up another channel of discussion through a third

party. We have not yet even given the Ambassador authority to respond

to Deng's remarks to Mr Heath. We certainly do not want him to reply

to remarks made to the Australians.

26 May 1982

vorio пог

R D Clift

Hong Kong and General Department

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Я

agree that

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