(3) TO DISCUSS HOW BRITAIN AND CHINA SHOULD CO-OPERATE DURING THE
RUN-UP TO 1997 IF HONG KONG''S PROSPERITY WERE NOT TO BE IMPAIRED.''
DENG MENTIONED ONCE AGAIN THAT TALKS WITH MRS. MARGARET THATCHER
LAST YEAR WERE UNHAPPY. HER EMPHASIS ON THE THREE TREATIES AND
BRITISH SOVEREIGNTY OVER HONG KONG WAS UNACCEPTABLE TO CHINA.
THE BRITISH HAD NOW CHANGED THEIR POSITION, NO LONGER INSISTING
ON THE TREATIES AND SOVEREIGNTYM. THIS WAS A CHANGE FOR THE BETTER.
THE CHINESE AND BRITISH AUTHORITIES WOULD BE ABLE TO BEGIN FURTHER
CONTACTS AND SUBSTANTIVE TALKS. MEANWHILE, SUBSTANTIVE TALKS BETWEEN CHINA AND BRITAIN HAD YET TO BEGIN. HERE THE QUESTION OF
'FACE WAS INVOLVED. TO BEGIN WITH, THE BRITISH HAD TO ACKNOW- LEDGE CHINA'S SOVEREIGNTY OVER HONG KONG AND ACCEPT IT AS A PRE-
CONDITION TO THE TALKS. DENG XIAOPING AGAIN SAID, WE WILL ENABLE THE BRITISH TO BACK DOWN WITH GRACE.' THE TALKS MIGHT NOT START WITH THE RECOVERY OF SOVEREIGTY. THE SECOND QUESTION, 1.E. WHAT TO DO AFTER 1997, COULD BE TACKLED FIRST. ONCE AGREEMENT WAS REACHED ON THE SECOND QUESTION, THERE WOULD NOT BE MUXH O BE IRONED OUT ON THE FIRST QUESTION (OF SOVEREIGNTY). DENG XIAOPING THEN INQUIRED OF HONG KONG AND MACAU DELEGATES TO THE NATIONAL PEOPLE'S CONGRESS AND CHINESE PEOPLE''S POLITICAL CONSULTATIVE CONFERENCE
HOW THEY VIEWED THE POSITION OF THE BRITISH ON THE QUESTION OF HONG
KONG'S FUTURE.
5. ONE OF THE DELEGATES ASKED IF THE HONG KONG ISSUE COULD BE
RESOLVED BY WAY OF SIGNING A NEW TREATY WITH THE BRITISH OR
EXTENDING THE LEASE. DENG STATED IN CLEAR-CUT TERMS THAT THERE
WOULD NEITHER BE ANY NEW TREATY NOR LEASE EXTENSION, ADDING, ''IF I WERE TO AGREE TO AN EXTENSION OF THE LASEE, I WOULD BE
REGAREDED AS (ANOTHER) LI HONGZHANG.'' DENG XIAOPING FURTHER SAID
THAT TAKS BETWEEN THE TWO COUNTRIRES COULD NOT DRAG ON FOR TOO
LUNG, OR PEOPLE'S CONFIDENCE WOULD BE ADVERSELY AFFECTED.
UNQUOTE
YOUDE
FUTURE OF HONG KONG
SIR I SINCLAIR LEGAL ADVISER
LIMITED
COPIES TO:
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MR BURROWS
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MR MARTIN
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