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CONFIDENTIAL AND PERSONAL

On the points of substance in your letter, it is now

clear to us all here that the 1995 elections will loom large

over the next year or so. We look forward to receiving the provisional timetable setting out the dates by which

decisions or action are needed. But Lord Caithness has

returned from his useful visit to Hong Kong with the message that the main political orientations (for example on how to

play the issue of the number of directly elected seats, and

whether to go to the Chinese on this issue alone or with a

package of proposals) will need to be clear by the time the

Secretary of State sees the Chinese Foreign Minister in the margins of the UNGA. This suggests to me a first collective Ministerial discussion in July, with an approach to the

Chinese in the early autumn. (But we shall need to look at

this again when we have your detailed timetable).

It will of course be necessary to take the mind of the

new Governor on all this. As a first step, we will be

preparing a note for the incoming government.

I welcome your agreement that Ministers should have a chance to comment on matters with a particular resonance at

Westminster, such as the voting system, before options are

irretrievably narrowed through consultations with the

Chinese and/or LegCo. You will want to know that the

Secretary of State, in commenting on your letter, agreed

that in the initial discussions with the Chinese the option

of some PR system of voting for Hong Kong should not be

closed off. We shall be pursuing separately with the

Secretary for Constitutional Affairs the need to give

Ministers a more political steer on the consequences for the

political groups in LegCo of the various voting systems.

CEWABH/2

CONFIDENTIAL AND PERSONAL

/With

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