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BILATERAL WITH THE PRIME MINISTER: 24 JULY: HONG KONG

ROYAL NAVAL PATROL CRAFT

Must consider patrol craft in the context of our other out

of area responsibilities (my minute of 15 July).

Believe highest priority should be attached to Hong Kong

patrol craft and West Indian Guardship, followed by Endurance and Belize garrison.

- Some scope for further savings in Hong Kong, eg personnel reductions, helicopters.

Cost of retaining craft: £15 million over 5 years.

Reducing vessels from 3 to 2 would save £3 million.

Timing of announcement now (your visit to China/Hong Kong)

particularly unfortunate.

VISIT OF PRIME MINISTER TO CHINA AND HONG KONG

But need to

Recognise complications and uncertainties.

put dates soon to Chinese. Suggest 30 August to

4 September.

Suggest we travel separately and meet in Peking. Visit

Hong Kong after China. Your views?

-

Problem over Guard of Honour in Tiananmen. Could tell

Chinese we don't want it. Your views?

TEDAER/1

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