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PROVIDE THE CHINESE WITH A WAY OUT BY OFFERING A BRIEFING ON TERMS WHICH WILL NOT BE DAMAGING TO US SINCE WE SHALL BE TALKING

WE SHOULD COUPLE THIS WITH AN ABOUT WHAT HAS ALREADY HAPPENED.

OFFER TO DEVELOP A DIALOGUE ON FUTURE CHANGES OUTSIDE THE JLG IN THE HOPE THAT THIS WILL DISSUADE THE CHINESE FROM PRESSING FOR

I ACCEPT YOUR ADVICE THAT IT WOULD SUCH A DIALOGUE IN THE JLG. BE RIGHT TO DO THIS BEFORE THE JLG.

3.

I BELIEVE THAT THIS COURSE OFFERS THE BEST PROSPECT OF

WE ACHIEVING THE GENERAL OBJECTIVES OF EXCO, WHICH WE SHARE. CANNOT GUARANTEE THAT IT WILL WORK: THE CHINESE MAY DECIDE TO

BUT IF PRESS FOR DISCUSSION IN THE JLG ITSELF OF FUTURE CHANGES. THEY ARE IN THE EVENT DETERMINED TO DO THIS, I DO NOT THINK THAT WE WOULD HAVE ANY GREATER PROSPECT OF PREVENTING THEM BY TRYING TO STOP THEM PUTTING THE MATTER ON THE AGENDA IN THE FIRST PLACE.

I THINK WE ALL REALISE THAT WE SHALL HAVE TO LISTEN SERIOUSLY TO CHINESE REPRESENTATIONS ON THIS SUBJECT HOWEVER AND

THIS IS NOT TO SAY THAT WE NEED TO WHENEVER THEY ARE MADE. ACCEPT THEM BUT THEY WILL CLEARLY HAVE A BEARING ON OUR DECISIONS IF ONLY BECAUSE WE SHALL BE ENDEAVOURING TO SET UP INSTITUTIONS WHICH WILL SURVIVE BEYOND 1997. I DO NOT THINK OUR ABILITY TO RESIST CHINESE VIEWS WHERE WE BELIEVE THEY MUST BE RESISTED WILL HAVE BEEN DIMINISHED BY OUR HAVING AGREED TO GIVE THEM A BRIEFING IN THE JLG ON DEVELOPMENTS WHICH HAVE ALREADY

TAKEN PLACE.

4.

HOWE

OCMIAN 6336

'HONG KONG AGREEMENT

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MR J CROWLEY PUSD

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COPIES TO: (VIA ADR)

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CABINET OFFICE

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

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