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MAINLAND. AND I WOULD RULE OUT COMPLETELY SUCH EXTREME MEASURES AS THE INTERRUPTION OF WATER OR FOOD SUPPLIES ACROSS THE BORDER. THE CHINESE DID NOT RESORT TO SUCH TACTICS EVEN AT THE HEIGHT OF THE CULTURAL REVOLUTION. THEY WILL WANT TO MAKE IT CLEAR THAT THEIR QUARREL IS WITH THE BRITISH AND HONG KONG GOVERNMENTS, NOT WITH THE PEOPLE OF HONG KONG, WHOSE INTERESTS THEY CLAIM TO REPRESENT.
10. INITIALLY AT LEAST I WOULD EXPECT THE CHINESE TO KEEP THE WIDER BILATERAL RELATIONSHIP LARGELY SEPARATE FROM THE DISPUTE OVER HONG KONG PROVIDED/PROVIDED THAT WE DO SO TOO. THEY WILL BE UNLIKELY TO CANCEL ZHU RONGJI'S VISIT UNLESS THEY BELIEVE THAT WE INTEND TO RETALIATE FOR LI PENG'S FAILURE TO MEET THE GOVERNOR BY DENYING HIM A CALL ON THE PRIME MINISTER. THEY MIGHT, ON THE OTHER HAND, DECIDE THAT IT WOULD BE 'INCONVENIENT' FOR LORD HOWE'S DELEGATION TO COME HERE EARLY IN DECEMBER. THEY PROBABLY TAKE THE VIEW THAT THERE IS VERY LITTLE IN THAT VISIT FOR CHINA AND THAT THEY WOULD HAVE NOTHING TO LOSE BY CANCELLING OR POSTPONING IT. THEY MIGHT REDUCE MY ACCESS WITHIN THE CHINESE GOVERNMENT, AS THEY HAVE DONE WITH MY US COLLEAGUE FOLLOWING PRESIDENT BUSH'S ANNOUNCEMENT THAT HE WOULD AUTHORISE THE SALE OF F16 AIRCRAFT TO TAIWAN.
11. I WOULD EXPECT NO EARLY IMPACT ON THE TRADE FRONT. AS YOU SAY, LI PENG RECEIVED LORD PRIOR'S TRADE DELEGATION ON 26 OCTOBER. WE WILL SEE WHETHER HE AGREES TO MEET LORD YOUNG, WHO ARRIVES FOR A SHORT VISIT ON 1 NOVEMBER. BUT IF THE DISPUTE DRAGS ON, BRITISH BUSINESSMEN MAY GET A MORE FROSTY RECEPTION, AND THE CHINESE MIGHT SEEK TO DEMONSTRATE THAT BAD BEHAVIOUR (IN THEIR EYES) LEADS TO THE LOSS OF CONTRACTS WHICH MIGHT OTHERWISE HAVE BEEN AWARDED TO BRITISH FIRMS (I DOUBT, FOR EXAMPLE, WHETHER THE CONTRACT FOR THE SUPPLY OF BAE 146S CONCLUDED IN THE SUMMER WOULD HAVE BEEN ALLOWED TO GO AHEAD IN THE PRESENT ATMOSPHERE). BRITISH AIRWAYS WOULD FIND IT DIFFICULT TO NEGOTIATE DIRECT FLIGHTS TO PEKING.
12.
THE CHINESE LONGER-TERM STRATEGY IS MORE DIFFICULT TO ASSESS. BUT WE MUST START FROM THE PREMISE THAT FOR CHINA AS OF COURSE FOR US THERE ARE ISSUES OF PRINCIPLE AT STAKE. THE CHINESE MAY BELIEVE THAT THE GOVERNOR'S CONSTITUTIONAL PROPOSALS, MODEST THOUGH THEY ARE WHEN VIEWED IN OUR PERSPECTIVE, MARK A FUNDAMENTAL CHANGE OF APPROACH TO THE JOINT DECLARATION ON THE PART OF HMG. A KEY ELEMENT IN THEIR APPROACH IS TO EXERCISE DECISIVE CONTROL ISSUES IN THE RUN UP TO 1997. AS ALWAYS WHEN MATTERS OF SOVEREIGNTY ARE INVOLVED, SENIOR LEADERS WILL BE BREATHING DOWN THE NECKS OF LU PING AND OTHERS AT THE SHARP END.
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