دوم

CONFIDENTIAL COVERING SECRET

MEETING BETWEEN DR MAHATHIR AND MRS THATCHER

FUTURE OF HONG KONG

POINTS TO MAKE (DEFENSIVE)

DSR 11C

:

1.

Since talks were agreed in September several meetings

with Chinese have been held. These are continuing. Common aim of maintaining Hong Kong's stability and prosperity.

Content confidential.

12.

2.

Differences exist but we believe arrangements can be agreed which will be acceptable to Parliament and to the people of Hong Kong. Despite Chinese propaganda we are concentrating on the talks. Aim to find a solution which as far as possible will maintain continuity and preserve the people's standard of living and way of life.

13. Meanwhile business confidence in Hong Kong remains

generally high. Important that nothing is said or done to damage this.

4.

Chinese propaganda has floated the idea of Hong Kong as

a Special Administrative Region of China. Some Hong Kong

people attracted to the idea of Hong Kong people running Hong Kong, but most believe it would not work and fear

Chinese interference.

5. Interested to hear your views. What do you think of the

SAR concept? Would Malaysian investors have faith in such

an arrangement? We do not believe it is compatible with the

common aim.

CONFIDENTIAL COVERING SECRET

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