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MDHIA $110

C) PADS: THEY COULD ISSUE PUBLIC DISOBLIGING STATEMENTS ON THE AIRPORT AND PORT DEVELOPMENT, THEREBY THROWING INTO DOUBT THE POSSIBILITY OF ATTRACTING SUFFICIENT PRIVATE INVESTMENT TO MAKE THEM VIABLE:

D) DRAFT BASIC LAW: WITHDRAWAL OF COOPERATION LEADING TO NO FURTHER IMPROVEMENT IN THE VARIOUS EXISTING TEXTS:

JOINT LIAISON GROUP:

E)

WITHDRAWAL OF COOPERATION RESULTING IN

NO PROGRESS ON OUTSTANDING ISSUES:

F) CROSS BORDER COOPERATION AND RETURN OF ILLEGAL IMMIGRANTS COULD BE SWITCHED OFF:

G) THEY COULD MOUNT A CAMPAIGN OF VIOLATION OF HONG KONG'S MARITIME BOUNDARIES:

H) POSSIBLE LIFTING OF ALL RESTRICTIONS ON MOVEMENT BY CHINESE NATIONALS TO HONG KONG. CAN WE ENFORE A BAN ON 'LEGAL '1 IMMIGRANTS CF 1962?

2.

THESE MEASURES WOULD PROBABLY NOT BE APPLIED SIMULTANEOUSLY, BUT ONCE LAUNCHED IT WOULD BE VERY DIFFICULT TO EMERGE FROM A DOWNWARD SPIRAL OF ''TIT FOR TAT'' MEASURES WITHOUT A SEVERE LOSS

OF POLITICAL FACE.

3. MULTILATERALLY, WITHDRAWAL OF COOPERATION FROM CHINESE IN THE SECURITY COUNCIL WOULD MAKE IT MORE DIFFICULT FOR US TO CONTINUE THE GALVANISING ROLE IN ADDRESSING REGIONAL SECURITY PROBLEMS. MIGHT IT ULTIMATELY MAKE IT MORE DIFFICULT FOR US TO RETAIN OUR STATUS AS A PERMANENT MEMBER?

4.

OUR PROSPECTS FOR PERSUADING CHINA TO SUPPORT BRITISH INITIATIVES ON MULTILATERAL ISSUES, E.G. DRUGS AND ENVIRONMENT WOULD BE REDUCED BY DISAGREEMENT ON HONG KONG.

5.

BILATERALLY, THOUGH ONE SHOULD NOT EXAGGERATE THE IMPORTANCE OF THE CHINA MARKET, A WITHDRAWAL OF COOPERATION COULD AFFECT SOME IF NOT ALL OF THE FOLLOWING COMMERCIAL AREAS:

PROJECTS WHICH ARE ABOUT TO BE FINALISED AND WHICH ARE OF HIGH

PROFILE/HIGH VALUE, SUCH AS:-

A)

(I)

JOHN BROWN ENGINEERING, SHENZHEN 100MW COMBINED CYCLE

POWER STATION, #35 MILLION:

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