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BENEFIT TO THE UK WHICH OUTWEIGH ANY ADVERSE CHINESE REACTION. IT IS EXTREMELY DIFFICULT TO SEE WHAT BENEFIT DAVIES' VISIT WOULD BRING TO THE UK, IN COMMERCIAL OR OTHER AREA, WHICH WOULD OUTWEIGH THE RISKS INVOLVED. WE NOTE THE ANALOGY WITH FRENCH OFFICIALS VISITING TAIWAN. HOWEVER, THE FRENCH GO THEIR OWN WAY IN POLICY TOWARDS CHINA, NOT NECESSARILY ONE THAT WE ARE ABLE OR WILLING TO FOLLOW.

4. IN CONCLUSION, IT IS DIFFICULT TO SEE THE SPECIFIC PURPOSE

BEHIND DAVIES' INCLUSION IN THE INVESTIGATION TEAM. IF IT IS POLITICAL, THEN WE SHOULD ACCEPT THAT THE CHINESE WILL RAPIDLY REALISE THIS AND BE PREPARED TO COME CLEAN ABOUT IT. ON THE OTHER HAND, WE SHOULD HAVE THOUGHT THAT OUR AIM WOULD HAVE BEEN TO MAINTAIN A LOW PROFILE ABOUT THE PROPOSED CHANGES IN THE STAFFING OF ATTC. A VISIT TO TAIWAN BY DAVIES, WHICH WILL INEVITABLY ACQUIRE A HIGH PROFILE WITH THE CHINESE, WILL ONLY SERVE TO ATTRACT ATTENTION TO THESE CHANGES, THUS INCREASING CHINESE SUSPICIONS. AT THE VERY LEAST WE SUGGEST POSTPONEMENT OF

A FIRM DECISION ON SENDING AN FCO OFFICIAL UNTIL WE CAN SEE OUR WAY A LITTLE MORE CLEARLY ON HONG KONG ISSUES.

5.

WE HAVE CONSULTED LOVE, WHO HAS ASKED US TO MAKE THE FOLLOWING POINTS:

A) DTI WOULD WELCOME A JOINT INVESTIGATION VISIT OF THE SORT PROPOSED:

B) DTI WOLD BE CONTENT FOR AN FCO OFFICIAL TO ATTACH HIMSELF TO THE HORNBY GROUP, SUBJECT TO SIR DEREK HORNBY'S AGREEMENT: C) LOVE HIMSELF HIS AT PRESENT COMMITTED TO ACCOMPANYING SIR DEREK HORNBY TO SEOUL FOR THE REST OF THE WEEK, BUT WOULD BE HAPPY TO ADJUST HIS PROGRAMME AS NECESSARY.

DONALD

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70

LIMITED

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FED

HKD

JOINT DIRECTORATE

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