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Mr Adley said the Chinese Ambassador here had recently told him privately that:
3.
(a) the stability of Hong Kong was the first priority for all
concerned;
(b) the Chinese people were extremely sensitive about the
sovereignty question;
(c) as soon as it became apparent that the British Government
understood this sensitivity, the Chinese people would respond overwhelmingly towards maintaining Hong Kong's stability;
(d) if the British Government were to accept China's stand on the
sovereignty question, immeasurable benefits would accrue to the
UK.
4. Mr Luce asked Mr Adley whether he thought the Chinese fully understood the factors on which Hong Kong's stability and prosperity
were based. Mr Adley thought that by and large they did.
Furthermore the Chinese fully understood that public opinion in Hong
Kong generally favoured maintaining the status quo. However, it was crucial for the Chinese to regain some of the face they felt they
had lost as a result of Mrs Thatcher's remarks in Hong Kong. They
also needed to be seen to be leading the negotiations. This
undoubtedly posed a delicate problem for the British Government
vis-a-vis the people of Hong Kong, but facts should be faced and the Chinese position on sovereignty accepted. The people of Hong Kong, themselves of Chinese ethnic origin, need not necessarily feel that
in accepting the Chinese premise on sovereignty the British Government were letting them down. EXCO did not reflect the opinion
of the man in the street. Indeed it was completely out of touch with what most of the inhabitants of Hong Kong thought about this
question.
5. Mr Luce said that the sovereignty problem might not be difficult
for Britain and China to resolve provided that there was clear
mutual understanding of the factors which constituted Hong Kong's
stability. In this context, Sir P Cradock in Peking had a very clear understanding of the way the Chinese were thinking, and was a
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