SECRET
77452
MDHIAN 4977
CHINA RESUMED THE EXERCISE (OF SOVEREIGNTY OVER HONG KONG. CHINA WAS CONCERNED TO MAINTAIN STABILITY AND PROSPERITY IN THE TERRITORY DURING THE TRANSITIONAL PERIOD. HE HAD TALKED TO THE GOVERNOR OF HONG KONG ON THE QUESTION OF NUMBERS OF DIRECTLY ELECTED SEATS. CHINA BELIEVED THAT IT WAS BETTER TO HAVE A GRADUAL PROCESS OF INCREASING THE NUMBERS OF DIRECTLY ELECTED SEATS. AT THE PRESENT TIME, THERE WAS NOT A SINGLE ELECTED MEMBER OF THE LEGISLATURE.
5. LI ADDED THAT AFTER 300 YEARS OF EXPERIENCE, THE UNITED KINGDOM STILL FELT IT NECESSARY TO HAVE AN UPPER CHAMBER. CHINA WOULD NOT TRY TO CHANGE THE SOCIAL SYSTEM IN HONG KONG AFTER ITS RETURN TO CHINA, BUT THERE WAS CONCERN ABOUT HONG KONG BEING TURNED INTO A BASE FOR ACTIVITIES AGAINST CHINA.
6. DR OWEN REPLIED THAT EVERYONE WANTED A SUCCESSFUL TRANSITION PERIOD. NO ONE WANTED HONG KONG TO BE A SOURCE OF SUBVERSIVE ACTIVITY AGAINST CHINA. HOWEVER, A SUCCESSFUL AGREEMENT ON THE NUMBER OF DIRECTLY ELECTED SEATS (IE 24 SEATS IN 1997) WOULD SHOW WORLD OPINION HOW A PEACEFUL TRANSITION COULD BE ACHIEVED. CHINESE COULD COME DOWN, THAT IS, BY BRINGING THE 24 SEATS FORWARD FROM 1999 TO 1997 THE WORD WOULD GO AROUND THG FLEDD AND THERE WOULD BE A GREAT RETURN OF CONFIDENCE IN HONG KONG. HE THANKED THE PRIME MINISTER FOR GIVING HIM SO MUCH OF HIS TIME AND SAII THAT HE WOULD NOT CONTINUE FURTHER ON THIS POINT.
7. LI PENG SAID THAT HE TOO WOULD NOT DWELL ON THE QUESTION OF FIGURES. THE STABILITY AND PROSPERITY OF HONG KONG WAS IN CHINA'S INTEREST. HONG KONG ACTED FOR CHINA AS AN AGENT AND AN INTREPOT THROUGH WHICH TRADE PASSED. THE CHINESE ECONOMY BENEFITTED GREATLY FROM HONG KONG, BUT SO DID HONG KONG BENEFIT BY PLAYING THE ROLE OF ENTREPOT CENTRE FOR CHINA. THIS WAS THE FUNDAMENTAL REASON FOR MAINTAINING THE CAPITALIST SYSTEM IN HONG KONG. IF HONG KONG WERE TURNED INTO A SOCIALIST SYSTEM, IT COULD NOT GO ON PLAYING THIS HELPFUL ROLE. LI CONCLUDED BY SAYING THAT HE WAS AWARE THAT THE BRITISH GOVERNMENT AND THE HONG KONG GOVERNMENT WERE ALREADY MAKING
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