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MEMBER GOVERNMENTS, BUT THERE WAS NO OBLIGATION ON THEM TO EXPRESS A VIEW. LORD CAITHNESS' ADVICE TO AMBASSADOR MA HAD BEEN THAT THE CHINESE SHOULD NOT TAKE THE RESOLUTION TOO SERIOUSLY. THE CHINESE WOULD DO WELL TO TAKE THAT ADVICE.

8.

IN RESPONSE ZHAO SAID HE WISHED TO HIGHLIGHT A NUMBER OF

POINTS. FIRSTLY IT WAS CLEAR FROM RECENT STATEMENTS BY VARIOUS BODIES IN THE US, OFFICIAL AND SEMI-OFFICIAL, THAT SOME PEOPLE WERE NOT MERELY CONCERNED WITH US ECONOMIC RELATIONS WITH HONG

KONG, BUT RATHER HAD A CLEAR POLITICAL AIM IN PROMOTING THE MCCONNELL BILL. THE CHINESE VIEWED THIS INTERFERENCE IN THE HONG KONG ISSUE SERIOUSLY. SECONDLY, CHINA WANTED HMG TO USE ITS SPECIAL RELATIONSHIP WITH THE US TO INFLUENCE THE WAY THE ISSUE

WAS HANDLED. IT WAS NOT NECESSARY TO HAVE A PUBLIC ARGUMENT WITH THE US ON THIS ISSUE BUT HMG COULD STILL USE ITS CONNECTIONS.

THIS WAS IN THE INTERESTS OF BOTH THE UK AND CHINA. THE CHINESE WOULD NOT WISH TO SEE CO-OPERATION BETWEEN THE TWO SIDES AFFECTED BY THIS ISSUE. THIRDLY, CHINA'S MEN STATUS WAS A SEPARATE ISSUE AND IT WAS NOT REASONABLE TO LINK IT TO THE MCCONNELL BILL.

9.

I REPLIED BRIEFLY THAT WHATEVER HAPPENED TO THE BILL I SAW

NO REASON WHY IT SHOULD AFFECT OUR BILATERAL CO-OPERATION ON HONG KONG. THERE WAS A LINK BETWEEN THE MCCONNELL BILL AND THE MAINTENANCE OF CHINA'S MFN STATUS ONLY IN THE SENSE THAT THE WAY BOTH ISSUES HAD ARISEN REFLECTED CURRENT CONGRESSIONAL ATTITUDES TOWARDS CHINA. I REMINDED ZHAO THAT THE BRITISH AND HONG KONG GOVERNMENTS HAD MADE GREAT EFFORTS TO HELP THE US ADMINISTRATION PRESERVE MFN STATUS FOR CHINA.

10. ZHAO REPEATED THAT THE MCCONNEL BILL WAS NOT CONDUCIVE TO THE PROSPERITY AND STABILITY OF HONG KONG AND WOULD IMPEDE THE IMPLEMENTATION OF THE JD. ALTHOUGH OUR TWO SIDES WERE STRENTHENING CO-OPERATION THIS COULD STILL BE DISRUPTED BY OUTSIDE INFLUENCE.

11. COMMENT. THIS WAS A QUITE STRONGLY WORDED DEMARCHE THOUGH

DELIVERED PERFECTLY AMICABLY. WE SHALL NEED TO CONSIDER CAREFULLY WHETHER A FORMAL RESPONSE SHOULD BE GIVEN, EITHER HERE OR IN LONDON. MY INCLINATION WOULD BE NOT/NOT TO DO SO SINCE OUR VIEW OF THE BILL AND THE INTENTIONS OF ITS DRAFTERS IS VERY DIFFERENT FROM THAT OF THE CHINESE AND WE WOULD BE UNLIKELY TO ENLARGE THE SMALL AREA OF COMMON GROUND. BUT IT MIGHT BE WORTH GIVING THE CHINESE AN INFORMAL INDICATION OF WHAT WE HAVE BEEN DOING TO GET THE REPORTING REQUIREMENT DROPPED.

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