The Governor said that his experience showed that relations

with China should be based on trust and good personal

5.

relationships.

China currently put great emphasis on economic development and

co-operation in this field was often the key to solving political

problems although the Chinese were likely to remain intransigent

in some areas eg human rights. He did not see the Sino/UK

dispute over Hong Kong as posing any dangerous precedent for

Macao, and believed the problems were of form rather than

substance and would be resolved if the Chinese were given room

for manoeuvre. Was LEGCO going to discuss alternatives to Mr

Patten's proposals?

6. STC said that it was up to LEGCO to decide. After initial

reluctance to take a stand there were now encouraging signs that

LEGCO members were taking this responsibility seriously. As for

the business community, they were beginning to perceive that the

first priority for business was not to follow China's wishes but

to safeguard the rule of law. The Chinese too would come to see

this soon. Li Ka Shing's advisers had told STC that his STAR TV

BBC Mandarin news service now had 10 million viewers in China.

Li Ka Shing expected Chinese censorship laws to change soon and

was putting up a new 160-channel satellite as well as building a

satellite dish factory in China.

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