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How far would China be prepared to take

non-cooperation before 1997? To the point of making

Hong Kong ungovernable?

- How important is it to avoid retaliation against

British commercial interests?

4.

By their nature, these questions do not lend themselves

to black and white answers. But the shade of grey we are

seeking will influence shorter term judgements.

How Can We Achieve Our Objectives?

5.

Securing a smooth transition will require cooperation with China over a wide range of issues. The question of the 1995 LegCo dominates debate at present, but other issues such as arrangements for the Civil Service and judiciary will also be important. On the immediate issue, we now face a choice

between talks with China in an effort to narrow differences,

or passing the ball to LegCo and leaving it to LegCo members

to decide whether to make amendments, in the light of their

own informal soundings with China.

6. Hong Kong opinion favours talks (no doubt because the general expectation is that they will resolve the present

dispute). Statements by Chinese leaders indicate that they

are still willing to have talks with us on their terms

(although there is no sign of a change in their position on

substance), and that introduction of the draft legislation

into LegCo is the step which would make talks impossible.

There is therefore a (narrow) window to get talks underway.

HongKongissuesahead/BRIEFS/NJH

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