CONFENTIAL

Clearly the need to re-establish a better working relationship over Hong Kong has been a powerful factor in our own rebuilding of contacts and cooperation with China

over the past eighteen months. More widely our wish to encourage a positive Chinese attitude on international issues, most notably the Gulf, has contributed to the general restoration of relations between China and the

West. Mr Kaifu will visit Peking shortly before the

Prime Minister, who will be the first EC head of

Government to visit China since 1989, Mr Andreotti is

likely to visit China later in September.

:

EC partners

have recognised the special needs we (and Portugal) have for rebuilding links with China. But human rights

concerns mean that most of them do not favour too rapid a

development of relations. Similar concerns of course

continue to hold back US/China relations.

Objectives of the Visit

(a)

Our objectives are:-

to sign the MOU, to secure a resounding Chinese

endorsement of the Airport Project, and to

demonstrate that Britain and China are working

together to bring about a stable and prosperous

future for Hong Kong;

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(b)

to demonstrate readiness to deal with the current

Chinese leadership on a range of issues, not confined to Hong Kong, in a constructive and hard-headed manner, by avoiding giving them (or the media) the impression that all is entirely

sweetness and light;

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