CONFIDENTIAL
FM PEKING
TO PRIORITY F C O
TELNO 1586
CONFIDENTIAL
HK B
020/1
OF 240818Z AUGUST 89
INFO PRIORITY HONG KONG
M
064211
MDLIAN 6222
TOP COPY Q DIST ?
PERSONAL FOR PAUL, HKD
HONG KONG PERSONAL FOR ACTING GOVERNOR.
YOUR TELNO 834 AND HONG KONG TELNO 2806 TO FCO : TAIWAN AND HONG KONG.
1. THE CAUTION INDICATED IN PARA 2 OF SECOND TUR IS WELL-ADVISED.
AS SEEN FROM HERE THE TAIWANESE APPROACH TO TOM ARNOLD FITS INTO A PATTERN OF DISCREET BUT UNMISTAKEABLE EFFORTS ON THEIR PART TO
CAPITALISE ON THE PRESENT DISENCHANTMENT WITH CHINA. THE CHINESE GOVERNMENT IS VERY MUCH ALIVE TO THIS AND, AS POINTED OUT IN RECENT FED SUBMISSIONS, WILL AS A RESULT BE EVEN MORE PARANOID THAN USUAL ABOUT ANY MOVES IT MAY DETECT BY OTHERS IN TAIWAN'S DIRECTION. IN THE CASE OF HONG KONG, PRC SUSPICIONS WILL BE HEIGHTENED BY THE DISSIDENT CONNECTION (TAIWAN HAS BEEN BRANDED
AS THE INSPIRER AND PAYMASTER OF PRO-DEMOCRACY AGITATORS JUST AS
HONG KONG HAS BEEN CHARGED WITH HARBOURING AND SUPPORTING THEM)
AND BY JOURNALISTIC SPECULATIONS SUCH AS LIU YEN'S ARTICLE IN
THE FAR EAST ECONOMIC REVIEW OF 11 MAY SUGGESTING HONG KONG
SHOULD REVERT TO TAIWAN RATHER THAN TO THE PRC.
2. HITHERTO HONG KONG HAS PROFITED FROM TAIWAN IN AT LEAST TWO WAYS. FIRST FROM DIRECT ECONOMIC RELATIONS AND TOURISM, AS DAVID FORD POINTS OUT. SECONDLY BECAUSE IT PROVIDES NEUTRAL
GROUND' ON WHICH TAIWANESE AND MAINLAND REPRESENTATIVES CAN MEET AND THROUGH WHICH TRADE CAN FLOW, THUS ENHANCING ITS PRACTICAL VALUE TO THE PRC AND PROVIDING A FURTHER REASON WHY PEKING SHOULD WANT TO PRESERVE THE TERRITORY'S SPECIAL CHARACTER
AFTER 1997. A POLITICAL/GOVERNMENTAL DIALOGUE WITH TAIWAN IS NOT NECESSARY TO ADVANCE THE FIRST OF THESE AIMS AND IT COULD PUT THE SECOND AT RISK. I FULLY SUPPORT, THEREFORE, THE NON- COMMITTAL LINE YOU HAVE TAKEN WITH ARNOLD AND WOULD SUGGEST CONTINUING TO TREAT HIS FINDINGS WITH CAUTION.
I
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DONALD
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