SECRET AND PERSONAL

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airport and our policy on democracy.

Redacted Under FOI Exemption Sec 27(1);

The Chinese approach to the airport financing issue so far has been consistent with such a policy of linkage.

We are keeping up the pressure on the

Chinese to respond to our proposal for negotiations. But it is beginning to look as if the Chinese are waiting at least until the Prime Minister's meeting with Premier Li Peng in Rio, and perhaps until the new Governor's arrival, before relinquishing their hold over the airport financing arrangements.

There are two early opportunities for us to influence Chinese thinking: The Governor's farewell visit to Peking (7 and 8 June) and the Prime Minister's bilateral with Premier Li Peng on 11 or 12 June). The Foreign Secretary believes that these meetings should be used to reassure the Chinese about continuity in British policy towards Hong Kong. This needs to be done in a way which does not pre-empt decisions which Mr Patten may wish to make in due course in Hong Kong, or leave us open to later accusations of having misled the Chinese.

But

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