CONFIDENTIAL

opinion will have a full opportunity to express view before any

final decisions are taken. No decisions yet on mechanics for this but personally see no future in referendum.

13. Good grounds for confidence in satisfactory outcome of talks.

In no-one's interest to see collapse of Hong Kong. Our 'cards' not

conventional ones. Chinese concerned to retain economic benefits

from Hong Kong although they certainly put political principal first. Our main advantage is that Chinese do not want to be put in position of imposing unilateral settlement on Hong Kong. cooperation. We are negotiating strongly on that basis.

Need our

14. My visit will be opportunity for comprehensive review of negotiations. No decisive outcome to be expected: equally there is no question of crisis or a turning point in the talks.

Hong Kong Department

April 1984

CONFIDENTIAL

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