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BETTER THAN BEFORE, AND THE NEXT ROUND WOULD BE HELD IN MID
NOVEMBER. THE CHINESE RETAINED DEEP-ROOTED SUSPICIONS THAT WE
WERE 'MILKING' HONG KONG.
4. MR LUCE LATER ASKED WOLFOWITZ HOW HE SAW THE CHINESE
GOVERNMENT AFTER DENG XIAOPING. HE EMPHASISED THE UNDERLYING
STRENGTH IN HONG KONG'S ECONOMY. HE EXPRESSED THE HOPE THAT THE
US GOVERNMENT WOULD DO WHAT IT COULD TO ENCOURAGE US INVESTMENT
IN HONG KONG.
5.
BUT
WOLFOWITZ THOUGHT IT WAS GOOD NEGOTIATING TACTICS ON THE
PART OF THE CHINESE TO MAKE OUT THAT WE 'MILKED' HONG KONG.
THEY FROBABLY REALLY BELIEVED THIS AND WERE JEALOUS. IN THE
COURSE OF SINO-US DISCUSSIONS, THE CHINESE HAD MERELY REHEARSED
THEIR STANDARD POSITION ON HONG KONG. WOLFOWITZ DID NOT THINK
THEY UNDERSTOOD THE BASIS FOR CONFIDENCE THERE. HE AGREED THAT
HONG KONG PEOPLE WERE CONCERNED PRIMARILY WITH THEIR ECONOMIC
PROSPECTS. HE BELIEVED THE HONG KONG 'PROBLEM TO BE BOUND UP
WITH THE POSITION OF DENG XIAOPING, WHO DOMESTICALLY HAD TO
APPEAR BOTH SUCCESSFUL AND STRONG. IT WAS DOUBTFUL IF DENG
PERSONALLY UNDERSTOOD THE BASIS OF HONG KONG'S SUCCESS.
6. WOLFOWITZ STRESSED THE IMPORTANCE OF APPEARANCES TO THE
CHINESE. ON MOST SUBJECTS, THEY WERE DEALING FROM A POSITION OF
WEAKNESS. IT THUS HELPED FOR APPEARANCES TO BE OTHERWISE. IF
THEIR POSITION WERE OPENLY CHALLENGED, THEN TENDED TO THREATEN
AND BLUSTER IN ORDER TO REASSERT THEMSELVES BEFORE THEY ALLOWED
THINGS TO MOVE FORWARD. CF THEIR REACTION TO THE PRIME
MINISTER'S REMARKS IN HONG KONG A YEAR AGO AND TO THE HU NA CASE.
7. WOLFOWITZ PREDICTED INSTABILITY IN CHINA AFTER DENG. HU
YAOBANG WAS ALLEGEDLY COMING UNDER FIRE AND DENG HAVING SECOND
THOUGHTS ABOUT HIM AS A SUCCESSOR. THIS MIGHT GIVE DENG AN
INCENTIVE TO SETTLE THE HONG KONG QUESTION WHILE HE WAS STILL IN
CONTROL.
8. ON US INVESTMENT, WOLFOWITZ SAID HE WAS UNAWARE OF ANY MAJOR
LOSS OF CONFIDENCE IN HONG KONG BUT THE US ADMINISTRATION WERE
PLANNING TO TAKE A CLOSE LOOK AT THE ECONOMIC QUESTIONS INVOLVED.
SHULTZ HAD MADE CLEAR TO THE CHINESE THE US INTEREST IN HONG
KONG'S STABILITY AND PROSPERITY AND HAD COMMENTED ON THE DELICACY
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