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adjustment should be offered in order to deprive the Chinese

of the argument that the proposals had been put forward on a

take it or leave it basis.

Any such change would need to meet the Governor's criteria that the electoral arrangements should be open, fair and command widespread support in Hong Kong. It would be premature to make any change now. The timing would need to be judged in the light of the evolution of opinion in Hong Kong. The Governor's present plan is to put legislation to the Legislative Council in February: although it could be the summer before the Bill completes all its stages. The vote is likely to be very close: and there will be an uncomfortably long time for Chinese strong-arm tactics to have an effect.

The chances of reaching an agreed set of arrangements with the Chinese for the 1995 elections, on a basis acceptable to Hong Kong opinion, is extremely remote. The Chinese themselves do not seem to expect it. But if we judged that to sustain support in Hong Kong it was necessary to make some change to the proposals, there would be advantage in

explaining it to the Chinese, in a way which gave them the

option of entering a serious negotiation with us. It would also deprive them of the argument that the proposals were a fait accompli and might limit the severity of their eventual

reaction. Meanwhile, we have put the ball in the Chinese court by asking them through the JLG how they propose that discussions be taken forward.

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Our priorities should therefore be to:

give strong support to the Governor in promoting his proposals in Hong Kong;

consider changes only if these are necessary in order to sustain support in Hong Kong for the key elements of his

proposals;

contain this row as far as possible, and show that we are

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