CONFIDENTIAL
5.
The Chairman of the US Foreign Affairs Committee, Congressman Hamilton, in a speech on 1 April to the Business Coalition for US/China trade spelt out his view that the US would be more likely to achieve its goals in China through strong diplomatic pressure than by playing the MFN card. Hamilton hopes that by staking out a centrist democratic position on MFN he will take the leadership on the issue away from activists like Pelosi. One argument he has used on the Hill against strict conditionality is that if Deng dies there would be a prolonged period of uncertainty in China during which it would be very difficult for any Chinese official to argue that China should make concessions to the US.
6. Our policy, endorsed by the Governor, is a two track one. In public and in contacts with Congress we are arguing for unconditional MFN renewal to ensure that they understand that anything less could severely damage Hong Kong's economy. In private, however, we are maintaining a discreet contact with some members of the Administration and giving thought to what sort of token conditions would do least damage to Hong Kong.
bground.coles17M.ADMIN
JEB
CONFIDENTIAL