.1 CONCLUDED BY EMPHASISING THE SENSITIVITY OF THE ISSUE: BOTH SIDES MUST PROCEED CAREFULLY. I SOUGHT A REACTION TO THE IDEAS I HAD PUT FOARD YESTERDAY (PEKING TELNO 1726).

KE'S FIRST INTERVENTION

9. KE THANKED ME FOR GIVING A BRIEF HISTORY. OF COURSE, IF THE MATTER IN QUESTION WAS MERELY A PROCESS OF DEMOCRATISATION (SIC), THE CHINESE SIDE WOULD NOT HAVE RAISED IT AT THE MEETING. HE THEN SPOKE AS FOLLOWS:

(A) HE EMPHASISED THAT CHINESE LEADERS WERE VERY CONCERNED ABOUT CURRENT REFORMS TO THE GOVERNMENT STRUCTURE IN HONG KONG AND THE DIRECTION OF DEVELOPMENT WHICH THE REFORMS REPRESENTED. ZHAO ZIYANG HAD POINTED OUT IN LONDON AND NEW YORK THAT AMONG HONG KONG PEOPLE THERE WERE DIFFERENT VIEWS ON THE SUBJECT AND THAT THE BRITISH GOVERNMENT SHOULD THEREFORE BE PRUDENT.

(B) ON A NUMBER OF OTHER OCCASIONS THE CHINESE POSITION HAD BEEN MADE PLAIN TO US. IT HAD BEEN EMPHATICALLY POINTED OUT THAT THE FUTURE GOVERNMENT STRUCTURE OF THE SAR COULD ONLY BE STIPULATED BY THE BASIC LAW. THERE WERE PROVISIONS TO THIS EFFECT IN THE JOINT DECLARATION. THE BRITISH AIM WAS TO MAKE SURE THAT THE GOVERNMENT STRUCTURE RESULTING FROM CURRENT REFORMS WOULD CONTINUE BEYOND 1997. WE WERE IGNORING TOTALLY PROVISIONS TO BE LAID DOWN IN THE BASIC LAW, AND WERE NOT CONSULTING THE CHINESE DURING THE PROCESS OF REFORM. HAD WE GIVEN ANY THOUGHT TO WHAT MIGHT HAPPEN IF THE RESULTS OF OUR REFORMS WERE IN CONTRADICTION WITH THE BASIC LAW?

(C) IN THE BACKGROUND BRIEF I HAD JUST GIVEN I HAD OMITTED AN IMPORTANT FACT. ALL THE DEVELOPMENTS (WE BELIEVE KE WAS REFERRING TO ALL THE EARLIER DEVELOPMENTS) HAD TAKEN PLACE BEFORE SIGNATURE OF THE JOINT DECLARATION. SINCE THEN MAJOR CHANGES HAD TAKEN PLACE. WE SHOULD THEREFORE BE AWARE THAT IT WAS NECESSARY TO RECONSIDER SOME OF THE MATTERS INVOLVED. KE THEN RECALLED THAT DURING THE NEGOTIATIONS, IN MARCH 1984, WE HAD PUT TO THE CHINESE A WORKING PAPER ON CONSTITUTIONAL ARRANGEMENTS AND GOVERNMENT STRUCTURE.

THE CHINESE SIDE AT THAT TIME HAD MADE IT PLAIN THAT THE COMPOSITION, FUNCTIONS, POWERS AND RESPONSIBILITIES OF THE SAR GOVERNMENT WOULD BE DETERMINED BY THE BASIC LAW.

(D) THE CHINESE SIDE HAD LATER MADE IT VERY CLEAR ON SEVERAL

OCCASIONS THAT CHINA WOULD NOT COMMIT ITSELF IN ADVANCE TO ANY CHANGE

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