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(E) PARAGRAPH 15. I DO NOT SHARE THE SQUARE BRACKETED JUDGEMENT IN THE FINAL SENTENCE. THERE IS NO QUALITATIVE DISTINCTION ON

THE MAINLAND BETWEEN PRINCIPAL OFFICIALS' AND THOSE UNDER THEM,

JUST AS THERE IS NO SUCH DISTINCTION CURPENTLY IN HONG KONG.

I VERY MUCH DOUBT THAT THE CHINESE WOULD WISH TO SEE SUCH A

DISTINCTION INTRODUCED AFTER 1997.

(F) PARAGRAPH 16. THE FINAL TWO SENTENCES IN QUARE BRACKETS ARE, I THINK, CAST IN THE WRONG TERMS. THE FACT IS THAT RETENTION CF THE ESSENTIAL SUBSTANCE OF HONG KONG'S GOVERNMENTAL SYSTEM AS IT

NOW OPERATES IS WHAT THE CHINESE WANT. THEIR RECENT ANXIETIES HAVE

COME ABOUT BECAUSE THEY ARE DEEPLY CONCERNED THAT WE MAY BE SEEKING

TO ALTER THAT ESSENTIAL SUBSTANCE.

(G) PARAGRAPH 22. I AGREE WITH THE SQUARE BRACKETED JUDGEMENT IN

THE FOURTH SENTENCE OF THIS PARAGRAPH. 1 NOTE THAT THE RECENT

**MIRROR' ARTICLE FORESAW A LEGISLATURE INCORPORATING A DIRECTLY

ELECTED ELEMENT. BUT SUSPICION OF DIRECT ELECTIONS RUNS VERY DEEP,

AND I THINK THAT FACT SHOULD BE REITERATED.

EVANS

HONG KONG AGREEMENT : RESTRICTED

LIMITED

HD/HKD

HD/FED

COPIES TO:

MR FIFOOT, LEGAL ADVISERS

MR WOOD LEGAL ADVISERS

RESEARCH D (FE)

D/HD PUSD

MR WILSON

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