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strong case to the Chinese that such a reorganisation is

essential for the maintenance of strong, executive-led

government over the next five years; that it does not commit

them to continuing the arrangements post-1997 (the Chief Executive's position will be different in a number of ways

from the Governor's) and that the Governor intends to chair

the new "hinge" committee so as to retain control. The fact

that Martin Lee and other liberals will not be admitted to

the Governor's innermost counsels should be welcome to the

Chinese. We should refuse to be drawn into a process of consultation with the Chinese on issues of ExCo composition

and LegCo management, which relate to administration in the next five years. The Secretary of State's meeting with Qian

at New York (one week before the Governor's LegCo address)

would be the right timing to give the Chinese political forewarning.

4.

Following the Secretary of State's discussions in Hong

Kong, the Governor proposes to send more detailed proposals

in September for the Secretary of State to put to OPD (K)

colleagues. We have established with the Cabinet Office

that the only feasible date for OPD (K) in that period is

15 September.

Lichtt's

PF Ricketts

DAWAJO/4

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