RESTRICTED

SECONDLY, CHINA CLAIMED THAT AFTER 1997 HONG KONG PEOPLE WOULD ENJOY NO LESS DEMOCRACY THAT AT PRESENT. BUT IN FACT THERE WAS NO (NO) DEMOCRACY IN HONG KONG NOW. IN ANY CASE HONG KONG PEOPLE WANTED FREEDOM, NOT DEMOCRACY.

5. THE SOUTH CHINA MORNING POST CARRIED A LENGTHY REVIEW OF THE PROGRESS OF THE TALKS SO FAR WHICH ARGUED THAT THE TALKS COULD PROBABLY PROCEED STEADILY EVEN IF MAKING ONLY A LITTLE PROGRESS AT EACH ROUND WITH THE POSSIBILITY OF AN AGREEMENT IN PRINCIPLE BY SEPTEMBER 1984. NOTING THAT INFORMAL CONTACT BETWEEN THE TWO SIDES WOULD CONTINUE, THE PAPER SPECULATED THAT THERE MIGHT BE MEETING BETWEEN THE GOVERNOR AND LI JUSHENG IN HONG KONG.

6. SEVERAL INDEPENDENT NEWSPAPERS RELAYED ACCOUNTS OF YESTERDAYS

OFFICIALLY EDITORIAL IN THE DAILY TELEGRAPH WHICH ARGUED THAT !! INSPIRED GLOOM ABOUT HONG KONG HAS LONG LOOKED EXAGGERATED'' SINCE INTERNATIONAL INTERESTS GAVE BRITAIN A RELATIVELY STRONG POSITION TO BARGAIN FOR CONTINUED PARTICIPATION IN THE RUNNING OF

HONG KONG,

HADDON-CAVE

FUTURE OF HONG KONG

LIRATHED

ED/FED

ED/PLANNING STAFF

ED/PUSD

D/ED/PUSD(MR FLOWER)

RESEARCH DEPT(MR WALKER)

LEGAL ADVISER(SIR IAN SINCLAIR)

PS

PS/LADY YOUNG

PSAR LUCE

PS/PUS

SIR J BULLARD

MR GIFFARD

MR DONALD

MR FRIGHT

SIR C TICKELL

2

COPIES TO: (VIA DISTR. ROOM)

BUCKINGHAM PALACE

PS/LORD PRESIDENT OF THE COUNCIL

PS/HOME SECRETARY

PS/CHANCELLOR OF THE EXCHEQUER

PS/LORD PRIVY SEAL

PS/SECRETARY FOR TRADE AND

INDUSTRY

COPIES TO:

(VIA ADR)

NEWS DEPT

MR ROBERTS

MR. BURROWS LEGAL ADVISERS MR. COLES NO 10 DOWNING ST SIR A PARSONS

MR MARTIN ASSESSMENT STAFF

MR GOODALL

HR BRENNAN

CABINET OFFICE

CABINET OFFICE

Π

PS/S OF S FOR DEFENCE

RESTRICTED PS/ATTORNEY GENERAL

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