CONFIDENTIAL
DIEU ET
MON-DROIT
4. As you will know, an attempt to meet some of Hong Kong's concerns was incorporated in the bill which the President vetoed earlier this month. This would have targeted sanctions on state-owned companies in China. We argued that it was impossible to disentangle state and non-state enterprises and that Hong Kong, which served as an entrepot for so much of China's exports, would suffer whatever products were targeted. But a measure of this type is likely to be brought forward again next year and there would be no realistic prospect of Clinton, if he were elected, vetoing it.
In
5. We need to consider, therefore, how we could seek to minimise the impact of such a measure on Hong Kong and/or if there is some way of further restricting the application of such sanctions as might be applied to state-owned enterprises in China (a copy of this year's draft legislation is enclosed). discussing all this with a Clinton administration, our hand should be strengthened by Chris Patten's recent statement on developing democracy in Hong Kong. This has been generally welcomed here. We will want to point out that complicating relations between China, Hong Kong and the US is not best calculated to secure Beijing's acquiescence in the development between now and 1997 of the Colony's democratic institutions.
ever,
You
Christophe
CJR Meyer
Cc:
Mr AR Paul, Political Adviser, Hong Kong
CONFIDENTIAL