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willingness to explore the concept of a 'management contract'.
However, a concession of this kind would at best buy no more than
Chinese agreement to continuing talks; it would not ensure a
favourable outcome.
41. But whatever the gap remaining between the two sides at
the conclusion of the Prime Minister's discussions it will be
essential, in order to maintain confidence in Hong Kong, to give
the impression that progress had been made, at least to the
extent of being able to announce at the end of the visit that
agreement has been reached on the early commencement of talks
aimed at mutually acceptable arrangements for the future. It
would also be highly desirable from the point of view of
confidence in Hong Kong, but tactics on this would need to be
decided on the spot, to announce a date on which this new phase
of talks would begin.
42. If agreement on the basis for the talks cannot be reached,
we should aim for discussions without commitment on either side.
The first stage would probably then be devoted on our side to
convincing the Chinese that continued British administration and
authority are essential to confidence in Hong Kong; and on the
Chinese side to an exposition of their position on sovereignty
and their belief that their plan would work. But the talks will
almost certainly reach a point where if breakdown is to be
avoided, with all the attendant consequences, one side or both
will have to shift.
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/43.