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differing views on sovereignty. Mr Luce said that we believed that
the Chinese genuinely wanted a negotiated settlement on Hong Kong.
Hong Kong was economically valuable to them. Moreover, Deng
Xiaoping was himself subject to various pressures. Most important
from the Chinese point of view, was that a satisfactory solution to Hong Kong could induce Taiwan to reunite with China. But if forced
to choose, there was little doubt that the Chinese would sacrifice
economic considerations for national pride. The recovery of
sovereignty over Hong Kong was their most.important consideration.
There was also little doubt that at a high political level, the
Chinese had only an incomplete grasp of how Hong Kong worked and was
integrated into the international system. We had therefore
concentrated in the talks on trying to educate them. In this
context it was helpful when influential people in the region (such
as Lee Kuan Yew), could point out to the Chinese some of the basic
truths about Hong Kong.
4.
Sir V Garland suggested that Hong Kong people and investors
needed guarantees against interference in their affairs. Hong
Kong's economic success derived substantially from conscious decisions taken by individual companies. Mr Luce agreed. From
HMG's point of view the ultimate safeguard would be a settlement
acceptable to Britain, China and the people of Hong Kong.
5. On the ways in which deadlock might be avoided, Mr Luce said that agreement on what constituted the basic ingredients of Hong Kong's stability and prosperity was the first essential. There were
some grounds for confidence in this. Recent newspaper reports indicated, for example, that the Chinese had welcomed the measures recently taken to stabilise Hong Kong's economy. If true, such reports showed that China had genuinely been worried about the
prosperity of Hong Kong.
6.
There was some discussion about ASEAN affairs and then about
Brunei. On the latter, Mr Luce said that during his recent visit to Brunei he had not been impressed by the Ruler. Brunei would be a potential trouble spot if the Ruler did not begin to show greater sensitivity towards his people's aspirations. He agreed that it would be useful for the British and Australians to keep in touch
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