Renewal with conditions

-

Renewal with conditions: bad news for Hong Kong. create uncertainty which would act as disincentive to

investment.

Isolate China?

Would

Easier to effect change in China by trade and contacts,

rather than isolation.

POLICY TOWARDS CHINA

Gradual rebuilding of contacts and bilateral cooperation with China over past year has provided better context for talking to Chinese about international issues and about Hong

Kong.

Recent agreement over Hong Kong airport was hard fought but was helped by better bilateral atmosphere.

Envisage continuation of this process of rebuilding links, but at a measured pace. Still considerable concern about Chinese human rights practice and lack of movement in

political reform. Doubt, were it not for the Hong Kong

Agreement that we would be considering visit at Prime Ministerial level at this stage.

KGBABD/2

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