Background

CONFIDENTIAL

1. After a visit to Hong Kong last year, Senator McConnell

introduced a Bill designed to bolster Hong Kong's autonomy under the Joint Declaration. The Bill is well-intentioned,

and largely a reiteration of the JD. But it includes more sensitive points, eg a provision for annual reports on JD implementation.

2.

The Chinese believe that the McConnell Bill is an

attempt to internationalise Hong Kong. They know that Martin Lee played some part in encouraging

Senator McConnell, and this feeds their suspicion of a

"British" conspiracy. Ambassador Ma lobbied Lord Caithness about it on 10 February and urged HMG to speak out publicly

against it. The subject is not on the agenda for the

Secretary of State's meeting with Qian Qichen but the

Chinese may raise it.

3.

The Embassy in Washington now expect that the Bill will

become law. But they warn that any public statement would

be damaging with the Administration and could stimulate

further opposition to renewal of the MFN status for China.

It would also expose us to the accusation of kowtowing to

the Chinese. We have therefore decided to avoid

high-profile lobbying on the Hill but quietly to let the

Administration and trusted congressional contacts know of

the points which concern us. The Administration are already

aware of our concern and plan to try to persuade McConnell

to amend the Bill.

JH2ACN/2

CONFIDENTIAL

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