TNAG-0742-FCO40-946-Relations-between-China-and-Hong-Kong-1978 — Page 43

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CONFIDENTIAL

Mr Murray

PS/Lord Goronwy-Roberts

Private Secretary

SINO-BRITISH RELATIONS

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OFFICER

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Mr Quaygtni

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1. The Prime Minister asked, in the light of recent telegrams from Peking, for an assessment of UK/Chinese relations and

for recommendations for action. Since the Secretary of State

last minuted to the Prime Minister on this subject, we have made a lot of progress.

I submit a draft minute to the Prime

Minister, the main elements of which were agreed at a meeting

held by Lord Goronwy-Roberts on 18 August at which our Ambassador

from Peking was also present.

2. The Secretary of State will wish to seek the Frime Minister's

endorsement for the broad lines of policy outlined in the draft

minute: but there are a number of immediate questions on which I recommend that specific action should be set in hand meanwhile:-

(i) The FCO should seek Treasury approval for an

(ii)

an increase in British Council funds to meet

the cost of the expansion in educational exchanges discussed between Mrs Williams and

the Chinese. It is clear from our preliminary soundings of the Treasury at official level that Ministerial agreement will be necessary. I therefore submit a self-explanatory draft minute to the Chancellor of the Exchequer.

Consideration should be given to the implications of the new relationship for the level of staffing of our Embassy in Peking.

CONFIDENTIAL

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