HONG KONG

CONFIDENTIAL

Chinese still dragging their feet about talks on Hong Kong. Governor made a statement to LegCo last Friday explaining

the position reached. No adverse Chinese reaction. But Liberals suspicious that we are gearing up for concessions

or secret deals. I had a chance to deal with this in the

House yesterday.

Alastair Goodlad called in Chinese Ambassador yesterday to put them on notice that if Chinese had not agreed arrangements for talks by today, the draft legislation would be published tomorrow.

The Governor has now announced that he will publish the legislation on Friday. That does not commit him to putting

it into LegCo immediately.

Expect that the Chinese will react adversely in public. But there are signs that their leaders have decided that they should resolve their differences with us through negotiations. They may be willing to accept talks in due course, even if these run in parallel with LegCo debate.

cabinet11.3 JM BRIEF

CONFIDENTIAL

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