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Executive Council and people of Hong Kong generally. people were somewhat calmer than a few months ago. They realised talks were proceeding steadily and were becoming used to the fact that no great announcements were being made. We kept closely in touch with EXCO whose views were particularly important.

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Mr Giordano passed on one interesting piece of information which he was happy for us to use. Recently the President of the Laly-China Friendship Association, an assemblyman, had visited China and then Hong Kong. In Hong Kong he and the local Italian representative of the Association, together with the Italian Consul-General had an invitation to dinner at the NCNA. There a senior NCNA official made a strong point of saying that the Chinese knew Hong Kong people were worried about freedoms after 1997. wanted to make it clear that freedom of religion would continue in all respects, eg there could be religious lorders, and religious bodies would be allowed to continue to

have direct contact with their mother churches or organisations abroad. Schools run on religious lines, which were currently attended by nearly 240,000 students, would be allowed to continue. The Italians gawed the impression that the NCNA wanted to drive this point home very firmly. Comment. This is interesting, and is as far as I know the first time we have heard religion specifically mentioned by the Chinese. I thanked Mr Giordano and told him that this had so far not come up in the talks.

Ms Halliday

Ms Halliday had not called called since October so I brought her up to date on the last 2 rounds, sticking closely to the brief just submitted for the visit of the Canadian Secretary of State for External Affairs, (11/15 December). Ms Halliday was particularly interested in the toning down of the Chinese propaganda campaign. She also pressed me on what kind of guarantees or assurances we might seek from the Chinese if we thought their plan was feasible. (This is always a difficult question!) I said there were of course various ways in which an agreement or treaty could be drawn up. It could be registerable at the UN which would make it more internationally recognised. There might also be ways of linking genuine autonomy for Hong Kong with support and co-operation from other countries having a special trading relationship with Hong Kong. If the agreement was broken by China those countries might be in a position to exert economic pressure on China. Ms Halliday remained pretty sceptical.

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As with Mr Giordano, I reminded her that this briefing should be treated as secret. I said we were only talking in any detail to the Americans and our old Commonwealth allies

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