}

CONFIDENTIAL

ANGLO-GERMAN TALKS: CALL ON SIR J COLES BY

HERR SCHLAGI NTWEIT, 2 APRIL 1992

It was

1. Sir J Coles welcomed Herr Schlagintweit. agreed that such talks were well worth doing and that we should aim in future for six-monthly talks (ie once per year in each country).

Hong Kong

2. Sir J Coles summarised the present outlook for Hong Kong in the light of his recent visit. Hong Kong was a large preoccupation, taking up a great deal of his and Ministers' time. The economy was in good shape with 5% growth, (lower than Hong Kong's best, but still respectable); major infrastructure projects were underway and in general economic confidence was high. Political confidence however was a little tarnished. There was

concern about what China would do after 1997. HMG's main

task was to create the conditions prescribed in the Joint Declaration of 1984; to allow for the preservation of Hong Kong's economy and life style.

of

3. For the Chinese, Hong Kong was a sensitive matter sovereignty. They appeared to be determined to adopt a policy of what they called 'struggle' over the next five years of transition; insisting on intervening in all the important decisions and requiring to be consulted.

They simply did not appreciate the amount of technical work to be done in preparing for the handover of a former dependent territory. This was complicated by the changing political situation in Hong Kong.

Five years

a go no body talked about politics, now everyone was much

CONFIDENTIAL

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