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27(1)

economic grounds) in the JLG. But we have also made clear that HKG reserve the right in the last analysis to take the

decisions they think are best for Hong Kong. There are few if any other corporatisation or privatisation decisions in the pipeline (indeed business criticises HKG for being too cautious). One possibility might be the Kowloon-Canton Railway Corporation: but the Chinese are certain to oppose

this.

Vietnamese Migrants

The announcement on ORP II will remove much of the

political heat in Hong Kong on this issue (first ORP II

flight planned for mid June). It is now up to Hong Kong to ensure that ORP II continues after the trial period by

making a financial contribution towards the reintegration of

returnees into their local communities. We should emphasise

that HMG is doing its bit. We should refute any criticism

that the UK is not meeting its commitment under the CPA to receive its quota since we will have accepted 2000 refugees

by the end of June 1992. UNHCR has acknowledged that we

have met our formal obligation under the CPA.

Pace of JLG work

8. When the two Prime Ministers met in Peking last

September they agreed to commit all necessary resources to

increase the rate of JLG work.

RB3ACW/4

CONFIDENTIAL

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