CONFIDENTIAL

PRIORITY TO PEKING

AND PRIORITY TO HONG KONG, UKREP JLG HONG KONG

HONG KONG TELNO 2116: UK/PRC AIR SERVICES

1. WE HAVE NOTED RESERVATIONS ON TIMING IN TUR AND HONG KONG TELNO 2092. WE AGREE PROGRESS SEEMS UNLIKELY IF CHINESE HAVE TAKEN UMBRAGE AT IMPENDING INTRODUCTION OF TAIWAN SERVICES. BUT CHINESE REACTION TO REQUEST FOR TALKS WOULD BE A WAY OF TESTING THE WATER. SO FAR THEY HAVE MADE NO EXPLICIT LINKAGE TO UK/PRC AIR SERVICES. RATHER THEY HAVE INSISTED THE TAIWAN SERVICES ARE CERTAINLY WE A POLITICAL RATHER THAN AN AIR SERVICES PROBLEM.

REGARD THE ISSUES AS QUITE DISTINCT AND WOULD PREFER TO CARRY ON WITH AN OFFER OF TALKS IN EARLY OCTOBER, NOT LEAST SINCE THERE IS NOTHING TO INDICATE THAT PROSPECTS WILL BE ANY BETTER IF TALKS ARE DELAYED UNTIL AFTER TAIWAN SERVICES HAVE COMMENCED. ADDITIONALLY, IT IS ALWAYS DIFFICULT TO FIND DATES WITH THE CHINESE AND, AS REPORTED EARLIER, MOSS'S DIARY IS VERY HEAVILY BOOKED IN COMING MONTHS.

2. WE NOTE HONG KONG COULD ATTEND TALKS IN PEKING IN THE LATTER HALF OF W/C 5 OCTOBER. GRATEFUL IF YOU WOULD OFFER DATES OF 7TH TO 9TH OCTOBER FOR A RESUMPTION OF TALKS IN PEKING, WITH A FALL BACK IF HONG KONG CONCUR OF W/C 2 NOVEMBER.

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