TNAG-1170-FCO40-1450-Future-of-Hong-Kong-1982 — Page 24

SECRET

225

2

REAL RISKS IN STARTING DISCUSSIONS WITH HUANG HUA. IF THE PAPER

SUGGESTED BY HM AMBASSADOR DOES NOT MENTION ' CONTINUING

ADMINISTRATION' NOW, HE WILL DRAW THE WRONG CONCLUSIONS: AND LATER ACCUSE US OF RAISING OUR BID. SECONDLY, IF WE MAKE THE

ECONOMIC CASE TO HIM DIRECT HE IS LIKELY TO REGARD IT AS

SPECIAL PLEADING: ECONOMIC ARGUMENTS FED IN BY CHINESE AND HIS OWN ECONOMIC ADVISERS ARE MORE LIKELY TO CARRY WEIGHT. THIRDLY

WE MAY BE DRAWN INTO SUBSTANTIVE DISCUSSIONS BEFORE WE ARE READY

FOR THEM. THE PATTERN PROPOSED IN PARAGRAPH 5 OF PEKING TELNO 222

MUST SURELY LEAD DIRECTLY AND IMMEDIATELY TO THE ISSUE OF

CONTINUING ADMINISTRATION.

6. THIS DOES NOT MEAN THAT IT WOULD NOT BE USEFUL TO PREPARE

SUCH A PAPER (PARAGRAPH 7 OF YOUR TUR). NOR THAT THE PROCESS OF

INDIRECT EDUCATION THROUGH INTERMEDIARIES SHOULD NOT CONTINUE

(YOUR PARAGRAPH 5). BUT AS I SEE IT THE ESSENTIAL FIRST STEP IS

STILL FOR MINISTERS TO CONSIDER JUST HOW FAR, IN THE LAST RESORT,

WE WOULD BE READY TO GO IN RETURN FOR CHINESE ACQUIESENCE IN OUR

OWN REQUIREMENTS. ONLY THEN CAN WE DECIDE HOW BEST TO PLAY THE

HAND WITH THE CHINESE BETWEEN NOW AND THE PRIME MINISTER'S VISIT.

GIVEN HMG'S PREOCCUPATIONS WITH THE FALKLANDS I DOUBT VERY MUCH

WHETHER THE CHINESE WILL EXPECT ANY EARLY RESPONSE TO WHAT TENG

SAID.

PYM

LIMITED

HKGD

FED

PS

PS/LORD BELSTEAD

PS/PUS

MR GIFFARD

MR DONALD

COPIES TO:

SIR E YOUDE C/O HKGD (K243)

2

SECRET

200