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There was

but things were not easy. Hong Kong dominated. misunderstanding by the Chinese of the Governor's proposals. Since Tiananmen Hong Kong had become much more political and

We had not just the commercial place it had been before. consulted the Chinese over the Governor's local elections proposals. It was not clear why talks about talks had broken down. The Governor was totally supported by HMG and all UK political parties. Naturally there was some nervousness in Hong Kong. We encouraged other parties and governments to talk privately to the Chinese in general terms. seek public support on specific issues. likely outcome, he said he hoped an understanding could be

If there were no reached which would be endorsed by Legco.

We did not

Asked about the

resumption of talks Legco would have to discuss the package and might amend it. But on the other hand they might enact it and the Chinese could then react adversely by eg setting up That would not be welcome. some form of shadow government.

a

He personally felt that in 20 years time Hong Kong would still be very prosperous and that this would be looked back on as

Mr Afanasiev said that with most relatively minor difficulty. of China's trade taking place through Hong Kong and some 90% of business with Guangdong province China should surely see that business arguments were stronger than political ones. Mr Solovyev agreed but acknowledged that China was in favour

The Chinese of discipline and still cautious about democracy. reaction was too short term. The problem was how to get them back to the negotiating table without them losing too much face. Mr Hum said we believed they would prefer settlement through compromise and consultation if this could be achieved. They had to think of the economic aspects, their international image, the US and MFN, the Olympics, and Taiwan.

Sir John Coles said Mr Patten would soon visit the United States. We were not sure yet about the attitude of the new Administration towards China.

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