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which makes the best case we can. Our strongest argument is that the exchange was in the context of discussions aimed at reaching agreement on a package of electoral arrangements: in the event this was not possible (because of differences over directly-elected seats in 1995) and for us the question of arrangements for 1995 thus remains open. At the Governor's suggestion the note also includes a defensive passage on the Governor's proposals on functional constituencies.

8. On procedure, the Governor is anxious to move ahead quickly. We should of course first inform the Chinese: but given Lu Ping's suggestion to the Governor (paragraph 4 above) in our view it would be reasonable to do so in terms of a simple notification that we propose to take up his suggestion. (For the Governor's present view see paragraph 9 below.) On the assumption that the Chinese will not formally ask us not to go ahead, Peking would then trigger action in Hong Kong. We would need to be prepared to release the texts in parallel in London.

9.

On tactics, there are two points to be resolved with the Governor, we hope in the course of 25 October:

(a)

(b)

the Governor is clear on the need to release the texts. But he is at present in favour of an initial interrogative approach to the Chinese to ask what relevant texts they have. We think this would only give an impression of weakness and disarray;

he has proposed adding to the explanatory not a challenge to the Chinese that if they want to make public other issues between the two sides, for example on the use of the SAR Land Fund before 1997

·

we would be happy to agree.

We

believe that tit for tat tactics of this sort would only widen the area of confrontation.

The Governor's staff now accept our view on both points, and expect the governor to do so when they consult him tomorrow. Once we can confirm this with the Private Secretary the telegrams can be despatched as they stand.

CO Hum

Redacted under FOI exemption 27(1),

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