CO537-3703 — Page 13

(19) is the reply to our telegram at (18) asking for the Governor's views as to the desirability or not of pressing on with the Hong Kong constitutional proposals in view of the present state of affairs in China. I have discussed it with Mr. McPetrie.

2. Reference paragraph 2 of (19), this is pretty obvious. What Sir Mark Young feared was the hand of the K. M. T. (then the power in China) in the Hong Kong Municipal Council. What we think

a possible danger now is the Communist hand (if the Communists attain power in China). If there is no power to speak of in China then of course Hong Kong politics will not be dominated by it.

3. (a) Tor the position regarding the draft legislation see paragraph 5(1) of my minute of 9/11. We have still not received Hong Kong's final drafts of the Bills. In paragraph 5 of (19) the Governor tells us that they have been amended in the light of (5), which is our despatch on the financial side of the proposals. If therefore there were any question of the Secretary of State's approval attaching to these drafts which it is proposed to publish we should have to see them first, not only to satisfy ourselves about them, but also to satisfy the Treasury.

(b) The Governor talks of the Municipal Council Bill with its three accompanying Bills. All we have here is the Municipal Council Bill and two accompanying Bills. We have no information about a third.

(c) Mr. McPetrie has studied the Municipal Council Bill (which is the most important of the Bills) but has not yet had time for the Schedules attached to it (one at least of which is, he tells me, important) or the two minor Bills. has many comments on the Municipal Council Bill, mainly legal and technical.

He

4. If the Bills are to be published merely, as it appears, to be knocked down, it certainly seems unnecessary that we should insist on seeing the revised drafts beforehand and put in a great deal more work on them (including consultation with the Treasury). At the same time we ought to let Hong Kong have the benefit of Mr. McPetrie's labours. Perhaps the best course is, in signifying agreement to the Governor's proposal (if it is agreed to), to send the Legal Adviser's comments on the Municipal Council Bill for the Governor's information, leaving it to him to incorporate these comments before publication or to keep them in reserve for use in subsequent discussions in the Legislative Council as he may prefer.

5. Mr. McPetrie suggests that it might be useful before going further for the matter to be discussed by you, Mr. Roberts-Wray, Mr. McPetric and myself.

6.