CONFIDENTIAL

177101

MDLOAN 08

BUT IT WAS NOT A DISASTER.

10.

WENSLEY ASKED ABOUT THE STATE OF OUR DIALOGUE WITH THE CHINESE. SHE HAD THE IMPRESSION THAT IT HAD BEEN CUT OFF AFTER TIANANMEN AND HAD NOT YET RESUMED. MCLAREN REPLIED THAT WE HAD REESTABLISHED AN EFFECTIVE DIALOGUE AND THAT FOLLOWING THE PROMULGATION OF THE BASIC LAW BY THE END OF MARCH THE JOINT LIAISON GROUP WAS LIKELY TO GET DOWN TO SERIOUS WORK AGAIN. SOME OF THE ISSUES WHICH THE CHINESE HAD RAISED AFTER TIANAMEN, EG THE COMPLAINTS THAT HONG KONG WAS BEING USED AS A BASE FOR WENSLEY SUBVERSION WERE LESS CONTENTIOUS THAN THEY HAD BEEN. SAID THAT THE AUSTRALIAN GOVERNMENT, AND SENATOR EVANS PERSONALLY, WERE DISPOSED TO HELP HONG KONG AND ASKED WHAT THEY COULD DO. MCLAREN SUGGESTED THREE WAYS. FIRSTLY AUSTRALIAN FIRMS COULD BE ENCOURAGED TO INVEST IN HONG KONG AND MAKE USE OF IT. SECONDLY, IN SPEAKING TO CHINESE MINISTERS THE AUSTRALIANS SHOULD TAKE EVERY OPPORTUNITY TO STRESS THE SCALE AND IMPORTANCE OF THEIR INTERESTS, AND THEIR CONCERN THAT THE CHINESE SHOULD KEEP TO THEIR JOINT DECLARATION UNDERTAKINGS. THIRDLY, AUSTRALIA COULD SUPPORT HONG KONG'S PARTICIPATION, NOW AND IN FUTURE, IN INTERNATIONAL ORGANISATIONS, PARTICULARLY RELEVANT NEW ONES SUCH AS APEC. ON APEC, WENSLEY SAID THAT THE AUSTRALIANS WERE SUPPORTIVE BUT IT WAS ONLY POSSIBLE TO MOVE FORWARD BY CONSENSUS. IT WOULD BE DESIRABLE TO BRING CHINA, TAIWAN AND HONG KONG INTO APEC AT THE SAME TIME. VARIOUS FORMULAE WERE BEING EXAMINED, INCLUDING A TWO STAGE FORMULA IN WHICH THE CHINESE HAD EXPRESSED SOME INTEREST. HOWEVER, THE DIFFICULTIES INVOLVED IN GETTING HONG KONG INTO APEC SHOULD NOT BE UNDERESTIMATED.

VIETNAMESE BOAT PEOPLE

11. MCLAREN EXPRESSED WARM APPRECIATION FOR ROBUST AUSTRALIAN SUPPORT IN RECENT MONTHS. HE THEN REVIEWED THE CURRENT SITUATION. FIGURES FOR ARRIVALS IN HONG KONG IN JANUARY WERE LOW BUT WELL-UP ON LAST YEAR. MORE WORRYING WAS THE INCREASING NUMBER COMING BY LAND AND FROM SOUTH VIETNAM. COPING WITH A NEW INFLUX FROM MARCH ONWARDS WOULD BE VERY DIFFICULT GIVEN THE AMERICAN ATTITUDE. THERE WOULD BE A SERIOUS POLITICAL PROBLEM IN HONG KONG. WENSLEY SAID THERE WAS AUSTRALIAN CONCERN OVER UNRAVELLING OF THE CAP. ON AMERICAN ATTITUDES, THEIR READING OF THE SITUATION WAS SIMILAR TO OURS BUT THEY BELIEVED THE VIETNAMESE WERE WILLING TO REACH A COMPROMISE. SHE HAD VISITED VIETNAM RECENTLY AND BEEN TOLD THE VIETNAMESE CONSIDERED THE FIRST MANDATORY RETURN OF BOAT PEOPLE TO HAVE BEEN BADLY HANDLED AND THAT THERE WERE TOO MNAY SECURITY PEOPLE ON THE PLANE.

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