CONFIDENTIAL

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MDHOAM 285

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cover and talks will not be

easy.

Our aim is to reach an understanding with China on arrangements to ensure that the elections will be fair, open and acceptable to the people of Hong Kong. It wil be for Hong Kong's Legislative Council to pass the necessary Legislation at the end of the day.

-It is in Hong Kong's interests that we should have a cooperative relationship with China over Hong Kong. We hope that agreement to discuss electoral issues will enable work to go forward in other areas. There is much work to be done if we are to achieve a smooth transition.

3. On points for the Chinese, please reassure Elder that we have no wish to give the impression of trying to orchestrate a public campaign against China, but that we would certainly find it helpful if the New Zealand side could take an opportunity during private contacts during his trip to China to emphasise the importance he attaches to Hong Kong's continued stability and prosperity and to the implementation of the Joint Declaration. As a regional and trading partner of both China and Hong Kong, New Zealand is well placed to impress upon the Chinese how vital it is that the Chinese follow through on "one country, "two systems" and show by their actions that they are serious about preserving Hong Kong as a successful international financial and economic centre in a region of growing importance.

4.

The points in paragraph 3 might also be employed with the Koreans (Seoul telno 217 refers). The Japanese are already well seized and have themselves spoken helpfully to the Chinese in

this sense.

NORTH KOREA

5. We also hope that the New Zealanders, as an Asia-Pacific power concerned about regional security, will bring up with the Chinese the question of North Korea's nuclear activities and urge them to use their good influence on the North Koreans to rescind their intention to withdraw from the NPT. We expect that the South Koreans and the Japanese will mention this to the New Zealand Prime Minister when he visits those two countries before going on to China. New Zealand, as a Security Council member, will be aware of what has been going on back in New York so should not need any briefing from us

from us on this topic.

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