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MR GOODLAD'S DRINK WITH SIR ADRIAN SWIRE, 4 FEBRUARY (1700 HRS)

Points to Make

Seen the note you sent to Sir J Coles on Swire's relationship

with China. Appreciate Swire's are in a very delicate position.

Chinese adopted more moderate tone between Christmas and

Chinese New Year, ruling out some of the more extreme measures

which had been threatened. Some suggestion they went too far

with public attacks on Jardines and loose talk about contracts

and franchises.

-

As expected, they are now making further threatening noises to

coincide with ExCo's consideration of the Governor's proposals.

None of the recent public statements aimed at British firms.

- Aware that Ambassador Ma has been arm-twisting senior UK

businessmen with interests in Hong Kong and China. Does not

square easily with what Vice-Premier Zhu Rongji said during his

visit to London in November about the prospects for Sino-British

trade. Some indication of divergent views on the Chinese side:

important that business leaders do not give Ma the impression

they are push-overs.

Expect draft legislation on Governor's proposals on Election

Committee and Functional Constituencies to be published soon. Will not be High Noon: a lengthy process of debate in LegCo:

some 65 alternative proposals to consider and further proposals

may be forthcoming. Still strong support for Governor's

proposals. We will accept the Council's decision on the eventual shape of the electoral arrangements.

We do not want the dispute to worsen. Have made clear to the Chinese that we are ready to have discussions- could take place in parallel with the debate in LegCo.

gdl.swre.ADM

SLM

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