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envisage in his region including the question of relations with Vietnam and Kampuchea, he thought that Hong Kong could be the most difficult for Australia to manage because of the great and growing importance of her relationship with China.

3.

In conclusion Argall pointed to the forthcoming visit to Australia in April of the Chinese Prime Minister Zhao Ziyang. This would be the first ever visit to Australia by a Chinese Prime Minister and would clearly attract a great deal of attention. Although the question of Hong Kong's future had not been mentioned during his Prime Minister's visit to Peking last year, he thought that since Mrs Thatcher had now discussed the question with the Chinese it might well come up this time round. Even if it did not come up during the talks, there would probably be press questions which would have to be dealt with.

4. I made reassuring noises to the effect that I thought the Chinese were as interested as we were in coming to some arrangement which would secure the long-term future of Hong Kong but it was clear that Argall is distinctly uneasy and has evidently not had much information about the progress of discussions so far. He is the most impressive of the DFA Heads of Division on whom I have called so far and I would expect that he is fairly influential within the DFA. As I have made clear at the outset, Argall did not actually ask for information but he came pretty close to it and there is little doubt that the DFA would welcome any briefing on Hong Kong which we may be able to give them in advance of the Chinese Prime Minister's visit. I should perhaps add that he made no mention, and neither did I, of any other Australian approaches on this subject.

5.

The High Commissioner has seen this letter before despatch.

Cc:

M Elliott Esq, FED, FCO

CAK CULLIMORE

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