SECRET
ESSENTIAL FACTS
Future of Hong Kong
1. The Lord Privy Seal knows the background and is aware of the
danger of Sir Y K getting the impression that HMG regard him as an
official intermediary. Important not to raise expectations in
Hong Kong (and UK) that the Prime Minister's visit will lead to
immediate solutions, even though both sides are now focussing
on the problem. Given the complexity and sensitivity of the issue
no-one should push for early decisions.
Invitation to Vice Premier Gu Mu
2. Sir Y K knows the position but is keen for Madame Gu to
launch one of his ships in May. Lord Carrington explained on
16 March that the ball is in the Chinese court.
3. In spite of recent changes in Peking, Gu Mu remains a Vice
Premier (and saw Mr Bremridge, the Hong Kong Financial Secretary,
in that capacity in Peking on 10 March). Not clear if he will
become a State Counsellor. Sir Y K's cousin and intermediary
with Gu Mu, Liu Xuzhang, has lost his position as Vice Minister.
Soft Loan to China
4.
Another reason for our not pushing invitation to Gu Mu harder
is to avoid raising Chinese hopes of a soft loan ($1 bn has been
mentioned), possibly linked to an agreement on the future of Hong
Kong. Sir Y K has personally raised this in recent weeks with
the Prime Minister, Lord Carrington, the Chancellor, Sir M MacLehose
and Sir E Youde.
SECRET
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