TNAG-1166-FCO40-1446-Future-of-Hong-Kong-1982 — Page 77

Redacted under FOI

exemption

section 27(1)

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-5-

DSR 11C

however

tbe

It might be best to feed our ideas

in at a high level in London, possible in a meeting between

the Secretary of State or the Prime Minister herself and

the Chinese Ambassador.

9. A further aspect concerns the possibility suggested by

Sir Y K Pao of linking some form of economic assistance to

China with the search for a solution to the Hong Kong

problem. We have already (at the prompting of Sir P

Cradock) been examining the possibility of a substantial

increase in aid to China, a field in which we have been

falling behind our competitors. It is very unlikely that

the Chinese would be prepared to offer concessions over

Hong Kong in return for economic inducements of this kind.

But progress over Hong Kong may be difficult if the Chinese

have reasonable grounds for criticising our aid performance

This will need further discussion in Whitehall.

10. The Prime Minister has asked for further views from the

Secretary of State on this question. No 10 have indicated

that Mrs Thatcher would prefer not to deal with the matter

by an OD paper at present. The attached draft is therefore

self-contained, expanding on the key point of sovereignty

and suggesting a duscussion between the Prime Minister,

the Secretary of State and the Lord Privy Seal.

There may

in addition be a further meeting to be attended by Sir

Murray MacLehose, Sir Percy Cradock and Sir Edward Youde.

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