SECRET

Present Position

6. The events in Tiananmen Square interupted discussion of

these issues. We and the Hong Kong Government consider it important to try and obtain Chinese agreement to continuity of principal officials. We therefore see advantage in renewing the discussion with the Chinese earlier rather than

later, to ensure that adequate time is available to identify and groom suitable candidates. The Hong Kong Government have invited Chen Ziying to visit Hong Kong in mid December to brief him on the Civil Service generally. The Hong Kong Government's intention is that this will initiate a dialogue which will, over time, progress to more sensitive issues, including the question of principal officials.

7. There are advantages in being able to agree with the Chinese the continuity of principal officials over 1997:

- Such persons would, by definition, be existing local civil servants. This would be good for morale and good for stability.

-

Settlement of this issue would remove a major concern both for civil servants and in the public generally. It would

remove the worry that large numbers of people sympathetic to the CPG will be transplanted into the government shortly

after 1997.

- It would give us an area of cooperation and consultation with the Chinese which both sides should look on as

beneficial. Good relations on this issue could help to improve the general atmosphere.

TICADL/3

SECRET

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