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Foreign and Commonwealth Office

London SW1A 2AH

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HKB 010/1

CONFIDENTIAL

Dew Chundes Charles

13 September 1988

Mr Wood W14/

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Mr Form 19 -

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Miss Slater

Sir Y K Pao

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Sir Y K Pao is calling on the Prime Minister at 9.30 am on 14 September. You might find it helpful to have a brief note on the topics which are likely to come up in the course of the meeting.

BASIC LAW

Sir Y K Pao is one of eight Vice Chairmen of the Basic Law Drafting Committee, although he does not appear to have played a very active part in the drafting process. The Prime Minister may nevertheless wish to emphasise that we have been carefully following the public debate over the draft Basic Law and have been working hard to ensure that the Chinese authorities are aware of the concerns of the Hong Kong people. The outcome of the drafting exercise will have a crucial effect on how Hong Kong people view the future of the territory.

DRAGONAIR

Dragonair is a British airline operating in Hong Kong. Sir Y K Pao controls about 35% of the total shareholding. Dragonair serves Thailand on a regular basis and has ambitions to expand its scheduled and non-scheduled services to other regional destinations, including China. One of our objectives in the forthcoming intergovernmental talks with China on air services is to secure rights for Dragonair to operate scheduled services to five points on the Chinese mainland other than Peking and Shanghai (already served by Cathay Pacific). If asked, the Prime Minister could emphasise that we will continue to support Dragonair in its desire

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CONFIDENTIAL

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