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proposal, to test the Chinese reaction and let the onus for

rejecting an elected Governor fall on them, does not appear to be in Hong Kong's best long term interests.

Link with Item 2

7.

One of our paper's main arguments is that, if we are to get

an agreement with the Chinese, we shall need to agree to a joint group in Hong Kong anyway; we should therefore take advantage of

this to bargain for an elected Governor in order to bolster

continuity. More detailed arguments on the Item 2 question are in the separate paper on this subject which I have submitted. The

recommendation in that paper is that we should not make any

concession on Item 2 until a possible visit by the Secretary of

State in July, but that we should probe the Chinese for

clarification of their ideas. But we need to get our own minds

clear on whether or not we want to make a link between the

Governorship and the joint group and to consider the timing of any

approach to the Chinese on the Governorship (see below).

Consultation with the Chinese

8.

The Governor is against consultation.

For the reasons given

We

in our paper, I do not agree with him. He speaks of it being worthwhile risking Chinese displeasure. The problem is that, if we

went ahead with proposals for an elected Governor without being

sure that the Chinese would accept them, we should risk much more

than displeasure. They could, by propaganda and disruptive

activity in Hong Kong cause very great damage to confidence.

should face the problem of putting our proposals into operation

against their proposition, when everyone in Hong Kong would know that the arrangements would be reversed after 1997. The effect on

continuity would be not merely unhelpful but disastrous.

9. We also need to have an understanding with the Chinese about

the position of the Governorship before 1997 in order to get a

clear statement in the agreement on the position of the Chief

Executive after 1997. There is therefore a strong case for

discussion with the Chinese, at any rate on the general concept of

an elected Governorship, well before a possible visit by the Secretary of State at the end of July. The most logical sequence

would be to broach the subject with the Chinese shortly before

publication of the Green Paper, which, on the Governor's present estimate, is likely to be 18 July, when he would present it to

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/LEGCO.

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