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SECRETARY OF STATE'S MEETING WITH BARONESS DUNN AT ANGLO-HONG KONG TRUST CONCERT/SUPPER, 11 FEBRUARY

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Warmly welcome Hong Kong's contribution of

HK$ 230 million (£15 million) towards HMG's Gulf costs.

Relations with China gradually improving (Vice Minister Tian Zengpei's visit in November, Governor's successful visit in January). But problems remain. Next steps? Further visits?

- Not yet decided about whether to visit China in Spring. But keen in any case to go to Hong Kong.

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Prospects of reaching agreement with Chinese on PADS, following next round of expert talks in Peking (21-23 February) and Lu Ping's visit to Hong Kong in early March?

Understand Allen Lee has been invited to a private visit to Peking before Chinese New Year for talks with Chinese. Welcome this.

- Understand that number of applications under our nationality scheme is still low (5000 applications so far) but that HKG expect a last minute rush.

Sorry to hear of Governor's accident. Hope he makes speedy recovery.

JONAFV/2

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