CONFIDENTIAL

POSTPONEMENT OF REVIEW WOULD SERIOUSLY UNDERMINE CREDIBILITY AND AUTHORITY OF HKG. WOULD THUS BE ENTIRELY AGAINST YOUR

INTERESTS.

11. WHAT WILL BE PROPOSED IN 1987 REVIEW AND THEREAFTER PENDING THE 1987 REVIEW, NO DECISIONS ON FURTHER CHANGES HAVE BEEN TAKEN. NO PRECONCEIVED IDEAS. WE ARE NOT IN A POSITION TO BRIEF THE CHINESE SIDE ON PLANS FOR THE FUTURE, SINCE SUCH PLANS DO NOT YET EXIST. SHALL TAKE CAREFUL ACCOUNT OF DEVELOPMENTS IN PUBLIC OPINION IN HONG KONG OVER THE NEXT 18 MONTHS, AS WE ASSUME THE CHINESE SIDE WILL ALSO BE DOING. THERE WILL THEN NEED TO BE A DISCUSSION DOCUMENT (GREEN PAPER).

12.

CHANGES IN THE EXISTING GOVERNMENT IN HONG KONG SINCE THE ISSUANCE OF THE WHITE PAPER HAVE GIVEN RISE TO A CERTAIN

DISTURBING SITUATION

WE DO NOT UNDERSTAND WHY THE CHINESE SIDE THINKS THIS AND WE DO NOT AGREE. THE PRIME MINISTER ASSURED PREMIER ZHAO ON 24 OCTOBER IN NEW YORK THAT THE PACE OF POLITICAL EVOLUTION WAS GOING VERY GENTLY. SIR GEOFFREY HOWE SIMILARLY TOLD FOREIGN MINISTER WU ON

4 JUNE IN LONDON THAT WE WERE PROCEEDING VERY CAREFULLY.

13.

A STUDY BE MADE OF THE ISSUES CALLING FOR CONSIDERATION AND

SOLUTION BY BOTH SIDES

AS I HAVE MENTIONED, WE HAVE TAKEN NO DECISIONS ON ANY FURTHER CHANGES AND CAN THEREFORE IDENTIFY NO ISSUES CALLING FOR CONSULTATION AND SOLUTION OURSELVES. NEVERTHELESS HAPPY TO HAVE

INFORMAL DIALOGUE ON CHINESE ANXIETIES.

HOWE

*HONG KONG AGREEMENT

LIMITED

HD/HKD HD/FED

HD/PLANNING STAFF HD/PUSD

DEP HD/PUSD

RES D (MR WALKER)

PS

PS/MR FENTON

PS/PUS

SIR W HARDING

MR WILSON

SIR J FREELAND

MR J CROWLEY PUSD

COPIES TO: (VIA ADR)

MR ROBERTS NEWS DEPT MR FIFOOT LEGAL ADVS MR MARTIN ASST STAFF

CABINET OFFICE

MR MALLABY CABINET OFFICE MR DRC CHRISTOPHER

CABINET OFFICE SIR P CRADDOCK NO 10 DOWNING ST. MR WOOD LEGAL ADVISERS

CONFCINTIAL

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