CONFIDENTIAL

135524 MDHOAN 5339

main aim seems to be to get enough members of LegCo to vote against the Governor's proposals to ensure that they can not pass. But so far support in legco has held up well.

we and the Governor will continue to promote his proposals, while remaining open to alternative ideas. It is right that LegCo should have the final say. Hong Kong people will then be able to make the final decision in the light of all the circumstances.

we and China share a strong interest in cooperation to ensure the smooth transition in Hong Kong in 1997. There is much work we need to do together to bring that about. We favour getting on with the practical work - eg at the Joint Liaison Group from 8-10 December even while differences over electoral issues remain.

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there have been suggestions in the press that if the Governor's proposals pass LegCo, the Chinese will dismantle them in 1997, and may bring forward the setting up of preparatory groups to organise alternative arrangements in 1997.

We very much hope that the Chinese will in practice not take such steps. If the LegCo elected in 1995 works well as we are confident it will the Chinese would have every interest in not overturning it in 1997. There is nothing threatening to China in the modest extension of democracy we are proposing : and which is part of the gradual evolution of Hong Kong foreseen in the Joint Declaration and Basic Law.

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LEGAL ADVISERS//MS BARRETT

.AND MS BROOKS

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PS/MR GOODLAD

SIR J COLES

MR APPLEYARD

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CONFIDENTIAL

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