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(II) WHAT THE CHINESE MIGHT DO: - WE COULD BRING TOGETHER AND EXPAND SOMEWHAT THE SECTIONS IN THE CURRENT DRAFT DEALING WITH THE SHORT TERM CHINESE TACTICS (MOBILISING OPTIONS TO YOUR PROPOSALS IN LEGCO) AND LONGER TERM STRATEGIES: THE THREAT TO SET UP ALTERNATIVE ARRANGEMENTS: PERHAPS EFFORTS TO INTIMIDATE PEOPLE FROM STANDING IN 1995 : SOME FURTHER ANALYSIS OF WHETHER THE CHINESE WOULD CONTINUE HIGH INTENSITY CONFRONTATION OVER CONSTITUTIONAL ISSUES EVEN AFTER A VOTE IN LEGCO TO SUPPORT YOUR PROPOSALS OR WHETHER THEY WOULD THEN WIND DOWN THEIR CAMPAIGN AND PROPOSE UNBLOCKING SOME PARTS OF POLITICAL RELATIONSHIP CAIRPORT? JLG?).

- WE COULD ALSO ADD A PARAGRAPH ON WHAT THE CHINESE MIGHT DO IF THEY DID ENTER SERIOUS DISCUSSIONS: THEY WOULD NO DOUBT SEEK OUR AGREEMENT TO THE 3 COMPLIANCES'': AND WOULD IN PARALLEL CONTINUE THEIR PRIVATE EFFORTS TO INTIMIDATE LEGCO MEMBERS AND HENCE ENDANGER A DEFEAT IN LEGCO. BUT THE SHRILLNESS OF THE PUBLIC CAMPAIGN MIGHT BE REDUCED UNTIL THEY SAW WHETHER AGREEMENT WAS POSSIBLE.

(III) CARDS WE HOLD IN OUR HAND.

وزی

Do not want & heate instability HER "Dannage China's image -as IKL long as sovereignty is treatin

A PARAGRAPH ON THE FOLLOWING LINES:

LOBBYING THE NEW ADMINISTRATION ON MFN (BUT THAT IS A CARD WE

AND YOU INTEND TO PLAY ANYWAY).

- THE SUPPORT FOR YOUR PROPOSALS AND WIDER INTEREST IN A PROSPEROUS AND STABLE HONG KONG IN US, OLD COMMONWEATH EEC ETC. BUT THIS IS NOT AN EASY CARD TO PLAY IN A WAY WHICH WILL BE EFFECTIVE WITH THE CHINESE.

A CONDITIONAL OFFER OF A LI PENG VISIT TO LONDON.

CANY YOU CAN ADD?)

e)

HURD

YYYY

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