One of Liao's tasks in recent months was to meet visiting groups from Hong Kong to discuss their and Chinese ideas on the territory's future.

This, coupled with his first-hand, if somewhat dated experience of Hong Kong, Japan and Western Europe, may have helped to give him a rather greater insight into the realities of the Hong Kong situation than many of his colleagues appear to possess. On the other hand, his death may cause a diminution of the peddling of stories and rumours in Hong Kong about the Chinese position, since Liao used to talk frankly and at some length.

No announcement has been made about a successor, but there is speculation that it may be the Vice Chairman of the NPC's standing committee, Xi Zhongxun. He is a former Governor of Guangdong Province.

Yours eve

(JE Holmes

مشهد

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CONFIDENTIAL

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