DSR 11C

CONFIDENTIAL

The British Government knew which factors made for Hong

Kong's stability and prosperity. It would, however, be

difficult to get the Chinese to see these factors in an

identical light. Mr Adley was well-placed to help in

this respect.

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2. Mr Adley said it was important for the British

Government to realise that they held no trump cards to

help them resolve the Hong Kong problem. It would

therefore have been best to have accepted at the outset

the Chinese position on sovereignty over Hong Kong.

The remarks made by the Prime Minister during her press

conference in Hong Kong last year had seriously offended

the Chinese, and the British Government should be careful

to avoid offending them again in the future. In the

long term the whole range of our bilateral relations

with the Chinese was more important than good relations

with them specifically over Hong Kong.

Mr Adley said the Chinese Ambassador here had told him

privately on Tuesday last that:

(a) the stability of Hong Kong was the first priority

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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

CONFIDENTIAL

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