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11. The risk of the atmosphere of negotiations on the Future being soured by a clash over air services in any case seems very Although a hard reaction from CAAC Must be expectedt, complete deadlock to unlikely. In any case,
småll. CAAC are not likely to persuade the MFA or Chinese leaders that our power to suspend air services is a serious blow to Chinese national pride, particularly if our diplomatic presentations in Peking, Hong Kong and London are successful.' MFA are unlikely to see this as a question of sovereignty. Chinese, accepted limits to their services in 1979; no new principle is involved in negotiating increases for both sides. Air services matters, moreover, do not automatically involve questions of sovereignty. For example the Nine-Point Proposal for Taiwan does not deal in details with air-services, but implies that Taiwan could retain its own air-line and aviation authorities. Even on the most pessimistic view of Chinese
intentions Hong Kong could hardly have less. The Chinese may even see advantage in showing themselves sensitive to Hong Kong
commercial interests.
12. But in any case we should have an opportunity to monitor Chinese reaction, overt and otherwise. If, against expectation, air services seemed likely to damage the Future negotiations,
DOT assure us that we would extricate ourselves without undue difficulty, patching up an agreement which could hardly be worse than the present one. The Chinese would be likely to help by giving us minor face-saving concessions.
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