CONFIDENTIAL

suspicions had been reinforced and their hostile analysis of

British policy seemingly vindicated". A further apologia for China's unreasonable position.

- "The terms that might have been secured in quiet discussions". Extremely speculative. We would argue that such discussions

behind Hong Kong's back were no longer possible, and furthermore

Sir P Cradock should know that even in private the Chinese would

have rejected the Governor's proposals as originally set out.

P13

- "Retreats from democracy as promised by the Governor"

Overstates the degree to which we would be prepared to move in

order to reach agreement with China.

- "Such a break would probably prove irretrievable".

Overstated. Who can say?

- "Losses inflicted on Hong Kong", "costly and unnecessary lesson in reality". What losses? Hong Kong economy burgeoning,

Hang Seng hitting new highs, confidence solid etc.

1

P14

Sir P Cradock's conclusions that these matters set in a wider

perspective may become to be seen as less alarming, while

welcome, raise the question as to why he has sought to present

them in this chapter in such an alarmist fashion. As a matter

of fact this chapter implies that differences over Hong Kong dominated bilateral relations to the exclusion of everything

else. In practice other areas of the bilateral relationship

(Ministerial visits, human rights exchanges, trade etc) were

largely unaffected.

jm.lett.JM

SLM

CONFIDENTIAL

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