CONFIDENTIAL

- Can (a) be achieved without prejudicing our ability to

achieve (b)? Given the Joint Declaration provisions about more intensive consultation, do we have to concede a greater say for China in how Hong Kong is run in any case?

- How to manage the transition in a way which promotes continuity of institutions, policies and personnel (including the crucial issue of the selection of the first

Chief Executive)?

- Is a workeable compromise attainable while the present regime remains in power in China?

If so, do we need to work for a qualitatively different relationship, and how should we go about it?

Should we try to construct some kind of new informal framework for high level contacts with China on Hong Kong, or should we continue on an ad hoc basis, as at present?

(b) Hong Kong Internal issues

How can we maintain good government (and law and order) in Hong Kong at a time when the morale and authority of the Hong Kong Government are becoming increasingly undermined?

- How can we promote the continued development of a democratic political system in Hong Kong, while minimising the difficulties that this could entail for the Hong Kong Government (and for Hong Kong's relations with China)?

LEGAER/7

CONFIDENTIAL

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