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THE ORIGINAL HAS BEEN RETAINED

IN THE DEPARTMENT UNDER

SECTION 3 (4) OF THE PUBLIC RECORDS ACT 1958

Mr Hum

PS/Mr Goodlad

SECRET

M43 02/2

PR Ricketts

Hong Kong Department

17 December 1992 PS/PUS

FROM:

DATE:

CC:

Mr Davies, FED

Sir J Coles

لة

217

HONG KONG:

CONSTITUTIONAL DEVELOPMENT

1. In a recent letter to No 10, the Private Secretary suggested that the Secretary of State might circulate to OPD (K) members a note setting out our game plan for handling Hong Kong issues over the coming weeks.

2. We have not yet heard whether the Prime Minister would like such a note circulated. But on the assumption that he would, I submit a draft paper. This draws on recent telegrams and my discussions in Hong Kong this week. I am clearing it overnight with the Governor.

3.

As I mentioned to the Minister this morning, I came back from Hong Kong more troubled than when I went. Popular support for the Governor's proposals seems from the polls to be holding up reasonably well, and the Governor remains genuinely popular. But I found a deep sense of unease going beyond the business community. Many people were concerned that the Chinese had already shown themselves capable of disregarding their own and Hong Kong's economic interests in pursuit of their political vendetta against the Governor. There is a general expectation of worse to come. More thoughtful interlocutors attributed the unexpected ferocity of the Chinese attack to their fear that the Governor's proposals would make it much more difficult for them to control Hong Kong in the way they had intended post-1997. So it had become a struggle for power with all that that entailed.

4.

I would not wish to be alarmist. But I think it is right that an OPD (K) note at this stage should alert Ministers to the possibility that the Chinese might take extreme measures against Hong Kong, even though the probability of that is not, as yet, high. A similar message comes through

There does seem to be a strand of thinking alive on the chinese side that if the Governor pushes through his electoral proposals, China should stop all cooperation and possibly even denounce the Joint Declaration. By doing so, they would quickly make Hong Kong ungovernable without any need for military intervention. The most unnerving suggestion

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