(g) Hong Kong Economic Journal said statement would affect Hong Kong

residents' economic choices. This would have some impact on

economy.

Later reaction generally subdued.

Consensus was that statement

contained little new. Although apparently breaching confidentiality of talks, only authoritative statements on talks were what issued from them. "New Evening Post" said Chinese recovery of sovereignty would pre-date 1997 if "subversive elements" rocked boat.

(x) "Sing Pao" (Independent) "exclusive" report 13-14 August (Hong

Kong telno 1206)

This quoted senior but unnamed NCNA official telling local left-wing intellectuals China to recover sovereignty over whole of Hong Kong in July 1997. This date not to be altered "unless special circumstances arise". Thereafter, no "three-legged stool" administration of Hong Kong, whose future Governor to be appointed

by Peking. Hong Kong's reserves to be "handed back" to Hong Kong

Government. (Comment: this story repeated in Hong Kong Standard of

15 August.)

(xi) "Seventies" magazine article

Article in August issue said China interfering in Hong Kong affairs by appointing Hong Kong and Macau residents to NPC and CPPCC. Claimed China's assurances on Hong Kong's future could not put hearts at ease. If confidence to be engendered in "Hong Kong people to govern Hong Kong" proposal, Hong Kong people must be allowed to

make own decisions on certain issues.

Article called on all patriotic Chinese to support those who were

patriotic, independent and willing, to come forward to guarantee

that "Hong Kong people to govern Hong Kong" was feasible proposition.

(xii) Chinese propaganda campaign (Hong Kong telno 1195)

This stepped up mid August in 3 main Communist papers (Ta Kung Po,

Wen Wei Po, New Evening Post). Apart from asserting "sovereignty

administration inseparable" said that:

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