J.A4 ANG

HONG KONG

POINTS TO MAKE

CONFIDENTIAL

I. Glad that ratification of the Hong Kong agreement has now taken place and that agreement is therefore in force.

2. We shall fully and faithfully implement its provisions. Confident that the Chinese will do likewise. We look forward to

constructive exchanges in the Joint Liaison Group and Land Commission. Hong Kong and the GATT will be an early subject in the

former. Quick agreement on ways to secure Hong Kong's continued participation after 1997 would be very beneficial for business confidence in Hong Kong.

3. Glad that there will be Hong Kong representation on the Basic Law Drafting Committee. More closely Hong Kong representatives are involved more likely Basic Law will be well received in Hong Kong.

4. Interested to learn that the PRC and Portugal are to enter negotiations on the future of Macao. Similar arrangements to those for Hong Kong envisaged? Time scale of negotiations?

[DEFENSIVE]

5.

We

Development of representational government in Hong Kong. must be responsive to widespread demand for greater degree of participation in government in Hong Kong. Cannot have it said that

are suppressing aspirations of Hong Kong people. But moving very carefully, and seeking to build on existing institutions. Believe what we are doing is likely to be positively helpful in long term to objective of Hong Kong people running Hong Kong.

6.

Defence. Pre-1997. Fully accept our responsibility to maintain

stability in Hong Kong up to 1997, and shall maintain sufficient forces in Hong Kong to assure this.

Post-1997. Accept right of Chinese Government to station forces

in Hong Kong after 1997 if they wish. Issue needs very delicate

handling, because of considerable sensitivity in Hong Kong public

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CONFIDENTIAL

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