CONFIDENTIAL

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VERY HIGH LEVEL ON THE CHINESE SIDE.

TO DECLINE TO PUT IT

FORMALLY ON THE AGENDA WOULD BE SEEN IN PEKING AS A MAJOR REBUFF BY US, AND WE THINK THAT THE CHINESE, IF ONLY FOR REASONS OF FACE, WOULD SEE THE NEED TO RETALIATE, POSSIBLY BY DECLINING TO DISCUSS ONE OF OUR PROPOSALS. A PROCEDURAL ARGUMENT ABOUT WHETHER CONSTITUTIONAL DEVELOPMENT SHOULD APPEAR ON THE AGENDA OR

MERELY BE MENTIONED IN THE MARGINS ALSO SEEMS LIKELY TO GET US

OFF ON THE WRONG FOOT WITH THE CHINESE ON THIS EXTREMELY

IMPORTANT AND SENSITIVE SUBJECT. IT WOULD ALSO PRODUCE A VERY

BAD ATMOSPHERE FOR OBTAINING THE POSITIVE DECISIONS WHICH WE NEED

ON OTHER SUBJECTS.

4.

IT WOULD BE HARD TO ARGUE FORMALLY THAT THE SUBJECT IS

OUTSIDE THE TERMS OF THE JLG, AND WE NOTE THAT YOU DO NOT SUGGEST THIS. WE MAY IN FACT IN FUTURE WISH TO ARGUE OURSELVES THAT THE

DRAFTING OF THE BASIC LAW, TO WHICH THIS SUBJECT WILL BE FUNDAMENTAL, FALLS WITHIN THE HEADING OF IMPLEMENTATION OF THE JOINT DECLARATION'. APART FROM THIS, WE CAN ALSO OF COURSE AGREE UNDER ANNEX II TO EXCHANGE INFORMATION OR CONDUCT CONSULTATIONS

ON SUCH MATTERS AS BOTH SIDES MAY AGREE ON.

5.

WE THEREFORE THINK THAT THE BEST COURSE WOULD BE TO ALLOW

THE CHINESE TO PUT THE SUBJECT ON THE AGENDA HAVING MADE CLEAR

THAT FOR US IT FALLS INTO THE CATEGORY OF SUBJECTS ON WHICH

THERE CAN BE AN EXCHANGE OF INFORMATION, BUT TO SAY THAT

GIVEN THE SHORTNESS OF TIME WE WOULD NOT BE ABLE TO PREPARE ANY

WRITTEN STATEMENT FOR THEM, BUT THAT WE WOULD BE HAPPY TO GIVE

THEM AN ORAL BRIEFING ON THE DEVELOPMENTS WHICH HAVE ALREADY

TAKEN PLACE (WE ENVISAGE USING SUCH A FACTUAL BRIEFING TO PLACE

THE VARIOUS DEVELOPMENTS FIRMLY IN THE CONTEXT OF THE GRADUAL

EVOLUTION WHICH HAS BEEN TAKING PLACE IN HONG KONG OVER THE PAST TEN YEARS, IE WELL BEFORE THE JOINT DECLARATION WAS NEGOTIATED): WE WOULD ADD THAT AS THE CHINESE KNOW THE HONG KONG GOVERNMENT

AND HMG ARE PUBLICLY COMMITTED TO A FURTHER REVIEW OF

CONSTITUTIONAL DEVELOPMENT IN 1987, THAT NO DECISIONS HAVE BEEN TAKEN ON THIS SUBJECT YET, AND THAT WE ARE THEREFORE NOT IN A

POSITION TO BRIEF THE CHINESE ON PLANS FOR THE FUTURE: THAT WE

SHALL BE TAKING CAREFUL ACCOUNT OF DEVELOPMENTS IN PUBLIC OPINION

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CONFIDENTIAL

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