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Kong was proceeding. We wished to keep in close touch with the Chinese government on developments in Hong Kong. The Ambassador commented that both governments wanted to see a prosperous Hong Kong. Thanks in good part to the co-operation between China and Britain, that goal was being realised.

East/West Relations

The Prime Minister gave a brief survey of the INF negotiations, and explained the reasons which have led her to express support for Mr. Gorbachev's reforms. However, we would judge by results and the fact was that there had been no significant change so far in Soviet external policies. We had to keep our guard up. The Ambassador said that the Chinese government took a very similar view. They hoped that Gorbachev would succeed because he would have to cut back on Soviet ventures abroad in order to do so. Equally they did not under-estimate the obstacles in the way of internal reform.

They believed that Gorbachev was failing to give sufficient importance to market mechanisms.

The Prime Minister asked for her greetings to be conveyed to Deng Xiao Ping and Zhao Ziyang.

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Robert Culshaw, Esq., M.V.O., Foreign and Commonwealth Office.

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Charles Powell

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