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indicate that we should like two things: first a quotable statement during the visit that went further than previous statements; and secondly agreement that the two sides should hold confidential talks on a contingency plan to deal with a failure of confidence in Hong Kong. As regards the statement, we would of course stress that we were not asking for a final solution to the problem. The Chinese would only be required publicly to improve on their earlier statements. As for the confidential talks, these would call for no final commitment from the Chinese nor would they prejudice the position of either side on the future status of Hong Kong. Rather they would establish a channel of communication which we could use if and when a slide occurs; and hopefully they would educate the Chinese in the kind of action or statement needed on their side to correct a slide.
7. A possible compromise, if the Chinese cannot agree to the proposal above, might be to seek their agreement to a joint statement by Mrs Thatcher and Zhao Ziyang, pledging both sides to find a satisfactory solution to the question of Hong Kong's longer term future, agreeing to the need for talks on the subject, and in any case affirming the common interest of both countries in the continuing prosperity of Hong Kong (the Chinese have already conceded publicly that talks would have to be held). However, we would have to avoid any suggestion that we accepted the Chinese line that "the time is not ripe", for of course we believe that now is not too soon to be considering the problem and so, I understand, does much of Hong Kong public opinion.
8. If the Chinese response to this approach is not helpful as will likely be the case then I recommend that the Prime Minister should in any case come. But it is possible that, if we allow the suspicion to enter their minds that Mrs Thatcher might not come (without of course saying so), the Chinese might consider these ideas more seriously.
9. The Prime Minister will not, I believe, be able to achieve progress on Hong Kong unless she is able to say more than the Secretary of State could when he came in April. However, since that time we have, on our side, prepared our contingency paper to put to Ministers and the Chinese have put forward their new proposals on Taiwan. As you know, they have often spoken of Taiwan and Hong Kong in the same breath and apparently Liao Chengzhi has said that Hong Kong should study China's offer to Taiwan. It seems to me that Mrs Thatcher could pick up Deng's reference to Taiwan when he spoke to Lord Carrington about Hong Kong in April and say that we have noted the connection between the two issues and that we have studied China's initiative on Taiwan with great interest. We have also been considering among ourselves possible arrangements for Hong Kong's future.
It seems
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