RDIADS

CONFIDENTIAL

IR Y K PAO'S CALL ON MR LUCE:

11.00 AM ON 4 JUNE

FUTURE OF HONG KONG

POINTS TO MAKE

I. Glad to note that economic indicators continue to show that confidence has returned to Hong Kong economy since signing of the agreement. Your takeover of the Wheelock Marden group in Hong Kong a helpful expression of confidence in the future. Grateful for your efforts in connection with the Ningbo steel mill project, and for the assistance you have given to Davy MacKee.

2.

Composition of the Joint Liaison Group announced on 21 May. Hong Kong Act ratified on 27 May. Joint Liaison Group will hold its first meeting in London between 22-25 July.

CONSTITUTIONAL DEVELOPMENT (DEFENSIVE)

3. The Hong Kong Government is fully conscious of the need to avoid any threat to stability. Thus have been moving very

circumspectly and sought to build on existing institutions, which

have served Hong Kong well, maintaining as far as possible their

past features including well-established practice of government by

consensus. These moves entirely consistent with thee principle of

Hong Kong people governing Hong Kong. Also fully consistent with

Annex I of the agreement.

4.

CONFIDENTIAL

THIS IS A COPY THE ORIGINAL HAS BEEN CLOSED FOR

84 YEARS UNDER FOI EXEMPTION No. 40

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