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4.

A number of people in Hong Kong have told individual

members of the Administration, in confidence, that they have received approaches. These people believe that the Chinese

are aiming to create a group of 30-40 advisers in all,

predominantly businessmen and professionals but including

some present and former LegCo members and ex-civil servants,

appointed for a period of 2 years initially. The plan is apparently that they will advise on individual issues in

Hong Kong and report direct to the Hong Kong and Macau

Affairs Office in Peking and not through NCNA. Those whom we know the Chinese have approached are by no means only the

predictable pro-Chinese hacks such as T S Lo, but of course

the UDHK and probably other liberals are ostracised.

Reports on other channels give more details.

5. What are Chinese motives? I suspect they are a mixture of the following: First, to fill the void left by the

disappearance of the Basic Law Organising Committee, and

Basic Law Consultative Committee, and create a rallying point for broadly pro-China people to undermine the liberal and "pro-British" elements particularly in LegCo (Britain's "advisory" body) and put pressure on those in the centre to

come out in favour of Peking. Second, to try people out

with a view to forming the Preparatory Committee

(established in 1996, 50% Hong Kong membership, purpose to

prepare for the SAR, choose the Selection Committee and to

vet LegCo members for the first legislature) and also for

the Selection Committee (400 members, composed entirely of Hong Kong people, purpose to recommend the candidate for first Chief Executive). Third, possibly to contribute to a "Grand Alliance" of broadly pro-Chinese forces from which

candidates could be drawn to contest the 1995 elections and

provide a counterweight to the UD. Fourth, to give Lu Ping

his own direct reporting on Hong Kong, bypassing Zhou Nan.

BECACY/2

JRB

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