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Hong Kong will be increasingly looking to China for reassurance about their future and that Chinese statements and actions will

Part

have proportionally much greater impact - whether positive or negative than anything that we or the Hong Kong Government can

say or do.

However it is not evident that the Chinese fully understand the process by which they can maintain confidence. of the problem is that their own policies towards Hong Kong have not always been fully thought through. Another problem is that of presentation. We cannot do much to make their policy making more coherent or rapid. But we might be able to influence them on presentation. We could for example encourage Chinese visitors to make key note speeches when they visit Hong Kong; it might also be possible to make greater presentational use of Chinese gestures towards Hong Kong (eg investment decisions, collaboration in major projects) as well as of Hong Kong investment in South China.

8.

There is thus definitely more scope for discussing the problem of confidence with the Chinese; encouraging them to take action to counter it; and suggesting the themes that would evoke a We need to particularly positive response among Hong Kong people. turn the exercise into a continuing co-operative and collaborative enterprise, periodically reviewed between the two sides (including through the Joint Liaison Group machinery). We could suggest that Mr Donald raises this in one of his early contacts with senior Chinese officials dealing with Hong Kong: I hope that these contacts can be more frequent, and more plain-speaking, than in the time of his predecessor.

9.

Other possibilities for more systematic action include:

more frequent Ministerial visits to Hong Kong, and greater emphasis on supportive themes by visiting Ministers (whether or not from the FCO);

finding more frequent occasions for up-beat speeches and statements. The Trade Development Council dinner in London, which the Secretary of State will not be attending, would have offered a good opportunity;

CONFIDENTIAL

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