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long period and it is time for a change. It is better for the new appointment to await the General Election.

Airport project proceeding rapidly. Major bridge contract (Lantau Fixed Crossing) due for award April/May. The Hong

Kong Government have to keep a level playing-field, but we have been giving the Anglo-Japanese Consortium (Trafalgar

House/Costain-led) all the support we can - · ECGD etc. Costains and Balfour Beatty also keenly pursuing airport site preparation contract, for which tenders are due in March. Other big British opportunities too: both airport-related (eg railway) and non-airport (eg Black Point power-station).

Martin

Relations with China better than a year ago but remain prickly: Chinese very nervous about democratisation Lee's past calls for the overthrow of the Peking regime a complication. We have to go on trying to educate them and seeking a better political understanding: Foreign Minister Qian Qichen here for talks on 9 March. Will press him again to speed up practical work in the Joint Liaison Group: crucial if smooth transition to be achieved.

(Defensive)

Democratisation. 18 out of the 60 LegCo seats were directly-elected in September. The next LegCo

elections are due in 1995: under the Basic Law if no more

than 20 seats are directly elected then, that LegCo can continue through to 1999, when there will be a further

increase. We like the idea of continuity through 1997 but

continue to favour a faster pace of democratisation: I have confirmed publicly that we will take this up again with the Chinese when the time is right.

First let LegCo

Peking

-

settle down a little.

and

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