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acceptability of arrangements made with the Chinese Government

concerning Hong Kong's future, taking into account the views of

Hong Kong.

(IF PRESSED) No concessions have been made by either side which

would anticipate the nature of any final agreement.

WOULD IT NOT BE MORE REALISTIC TO CONCEDE NOW ON THE QUESTION OF

CHINA'S SOVEREIGNTY/RIGHT OF ADMINISTRATION?

5.

Each side is aware of the other's position. We aim, in

detailed discussions with the Chinese Government, to look at the

Hong Kong question realistically from every angle. We are willing to consider any measures which would safeguard Hong Kong's continuing stability and prosperity, and which would be acceptable to Britain, China and the people of Hong Kong. Within these criteria, our approach is flexible.

BRITISH SELL OUT

6. Any such suggestions are harmful and untrue. We have been

trying and will continue to try throughout the talks to obtain the best possible deal for Hong Kong which will preserve its prosperity and stability. We are unwavering in seeking a settlement acceptable not only to Britain and China but also to Hong Kong.

FAILURE TO REACH AGREEMENT WITH THE CHINESE

7.

That is a very pessimistic view. The agreed common aim is to maintain Hong Kong's stability and prosperity. We mean to achieve an agreement and our current good relations with China will help us to do so. We both have a clear interest in a prosperous and stable future for Hong Kong.

CHINESE STATEMENTS AND PROPAGANDA

8.

We have of course seen a number of reports of Chinese views on

/ Hong Kong. In our talks in Peking both sides have outlined their

positions. There is much exploration still to be done. We do not

regard the outcome of the talks as prejudged by anything said

/outside

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