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5004

1

(P)

PARA 22. WE WONDER IF THE SENTENCE IN SQUARE BRACKETS DOES NOT PREJUDGE THE QUESTION OF WHETHER THIS SHOULD IN

FACT BE OUR OBJECTIVE AT ALL?

3.

WE AGREE WITH ALL PEKING'S COMMENTS ON YOUR TELNO 2910,

BUT WOULD ADD THE FOLLOWING:

(A)

(B)

WHILE ACCEPTING THE FINAL POINT IN PARA 2 (B)(1) OF PEKING TUR, WE BELIEVE THAT THE CHINESE WILL NEVERTHELESS ENSURE THAT IN SOME WAY THEY HAVE A PERSON IN HONG KONG TO PERFORM THE FUNCTIONS IN QUESTION.

WE TEND TO AGREE WITH YOUR ASSESSMENT IN PARA 15 OF YOUR TELNO 2910, ON THE ASSUMPTION THAT YOU ARE THINKING OF PRINCIPAL OFFICIALS INTRODUCED FROM OUTSIDE THE CIVIL SERVICE, RATHER THAN OF THE DISTINCTION MADE BY PEKING.

4.

WE HAVE NO COMMENTS AT THIS STAGE ON YOUR TELNO 2915. ARE GRATEFUL FOR THESE USEFUL PRELIMINARY THOUGHTS ON THE OPTIONS THAT MIGHT BE PRESENTED IN THE 1987 REVIEW, AND LOOK FORWARD TO SEEING THE OUTCOME OF EXCO'S DISCUSSION OF THEM.

WE

HOWE

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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