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4.
I turn now to the question of the Prime Minister's visit: you asked for my views on the advice we should give.
As you say, the visit will raise expectations in Hong Kong, particularly if the coming of July 1982 focuses attention on New Territories mortgages. If Mrs Thatcher came away with no more than a personal "hearts at ease" assurance from Deng, it would probably do more harm than good in Hong Kong. I must own that as things are I see little chance of getting much more than that from the Chinese. In addition to the inherent difficulties of the question for them, there is now also their preoccupation with Taiwan. Although I do not expect the present level of activity on this initiative to endure for much longer, next year Taiwan will probably still be for the Chinese a more urgent problem than Hong Kong.
5.
The Prime Minister should of course be made fully aware of the risk that she might return empty-handed on Hong Kong before she decides whether or not to come to China. But the potential damage of not coming would, I think, be greater. Speculation would be aroused about our differences with China over Hong Kong, and this would be given greater prominence if the Prime Minister were to come to the Far East, but not visit China. Some might see a cancellation of the visit as acquiescence in China's "wait and see" line on Hong Kong. This is something that we should make every effort to avoid. Not to come would be taken badly by the Chinese, who would see it as a snub, and our relations generally would suffer. We would face problems of access at the highest level here, while our competitors continued to enjoy the benefits of a steady stream of such visits. We should face in effect a moratorium on major dealings with China until the Hong Kong problem was settled. This would be unacceptable for Anglo-Chinese relations generally, and would lose us the opportunities - such as they are - that we presently have to raise the Hong Kong question itself. My recommendation is therefore that the Prime Minister should come, despite the risk that, as far as Hong Kong is concerned, the visit might be seen as a failure.
6.
The task before us now should therefore be to do what we can to minimise that risk, and for this we should consider seeking Mrs Thatcher's authority to consult the Chinese before her visit. I have already suggested, in my telegram No. 611 that Mrs Thatcher might tell Zhao Ziyang at Cancun that she wanted to take up the invitation to visit China, but that she would like to be able to come in the expectation that she would get more than a mere repetition of the "hearts at ease" assurance on Hong Kong. If it was agreed, I think that I should speak here, preferably to Huang Hua, some months before the visit and repeat that line. As I see it, we might at that stage
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