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NOTE OF A MEETING BETWEEN MR A E DONALD AND/ CONGRESSIONAL STAFFERS IN WASHINGTON ON 1 DECEMBER 1983
RECEIVED IN NE
INDON
HONG KONG
1.
Those present were Mr Bill Barnds, Mr Vance Hinemann and Mr Richard Bush from the House South Asia and Pacific Affairs Sub-committee staff, Mr Broadus Bailey from the Senate East Asia Sub-committee staff and Mr Mark Mohr from Senator Glenn's staff. Mr Donald asked that his remarks be treated in the strictest confidence.
2. Mr Barnds asked about the relevance of the Hong Kong talks to Taiwan. Mr Donald said the Chinese had made an intellectual effort to study and reconcile the co-existence of capitalist and communist systems within China, but they did not understand the confidence factor, and believed that people should take them on trust despite their record. Privately they recognised a link between these two issues but formally they distinguished the colonial problem of Hong Kong from the internal problem of Taiwan. Their line of ''Hong Kong people to govern in Hong Kong'' was fine as a slogan since Hong Kong people had been capable of doing so for a long time. But the reason they did not like the Chinese slogan was that the British link was the guarantor of Hong Kong's independence from Peking.
3. Chinese policy towards Hong Kong had been consistent since the Fifties, though it had subsequently been elaborated by their peoposals for special administrative regions embracing the three territories of Hong Kong, Macao and Taiwan and the special economic zones. The Chinese wanted British co-operation, but we could not contemplate a ''sell-out''. If considerations of face could be resolved, there was a chance that we could keep the present systems going for some time, but we had to retain confidence in Hong Kong. It was worth remembering that Hong Kong had natural advantages as a prot and commercial cross-roads which the Chinese would not wish to destroy.
4. Mr Barnds agreed that they might not want to do so, but could do so inadvertently. Their threats to walk out of the talks gave them some leverage. Mr Donald said that China needed British co-operation to run Hong Kong and to get it ready for the 21st century. The crucial thing was to find an insulator to keep the Chinese from directly interfering in, Hong Kong if we were to give up sovereignty and keep confidence alive.
5.
Mr Bush quoted Lucien Pye's article in the September 'China Quarterly' about China's ability to increase the foreign exchange earnings from Hong Kong even if the British left. Mr Donald said this article was unconvincing. We estimated that 30-40% of Chinese foreign exchange came through Hong Kong. The Chinese argued that this included money passing through Hong Kong which would come to China in any event, and that the real figure was only 20%. Foreign exchange earnings constituted only about 7% of
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/China's