MELAAZ

CONFIDENTIAL

SECRETARY OF STATE'S VISIT TO WASHINGTON, 10-12 SEPTEMBER

HONG KONG/CHINA/VIETNAMESE BOAT PEOPLE

Points to Make

CHINA

Political developments in China since June do not justify an

early relaxation of Western measures.

Signs are, on the contrary, that the hardline leadership is

tightening repression arrests and executions, crackdown in

education sector.

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Chinese leaders doubtless waiting for cracks to appear in

Western unity. Would send the wrong signals, and be misunderstood

by Western public opinion if Western measures relaxed too soon.

Pressure for general trade/economic sanctions must be resisted.

General sanctions would be harmful to Chinese people. And would be

immensely damaging to Hong Kong.

HONG KONG

Confidence : General

Situation in Hong Kong has settled down slightly. But Tiananmen massacre had profound impact, and effects will persist. Doing all

we can to rebuild confidence and demonstrate continuing British commitment to Hong Kong

Look to United States and our other friends in international

community for support. In view of major US economic stake there, a

prosperous, confident, Hong Kong very much in US interests both for its own sake and as gateway to the most dynamic and prosperous part

of China.

CONFIDENTIAL

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