CONFIDENTIAL

Will wish to study draft very carefully. But on basis of

advance copy provided by Chinese Government, seems a broadly

reasonable document. There are certain defects, and also areas

which are likely to be much discussed in Hong Kong. If there are

provisions in this draft which need revision, Hong Kong people

should put to the Chinese Government clear and sensible

alternatives. No reason to doubt Hong Kong people's ability to do

so or Chinese willingness to listen. We shall do all we can, behind the scenes, to press for improvement where defects are perceived in

the text.

CONFIDENTIAL

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