TNAG-1171-FCO40-1452-Future-of-Hong-Kong-1982 — Page 104

SECRET

SIR Y K PAO'S CALL ON THE SECRETARY OF STATE : 12 NOON ON 21 MAY 1982

POINTS TO MAKE

Personal

1.

Glad to meet Sir Y K. Sorry he was unable to see a Minister

last time, because of Falklands crisis.

Future of Hong Kong [If raised]

2.

Little new since Sir Y K called on Lord Carrington on

16 March. Subject bound to come up during PM's visit in September.

Hope for progress, but wrong to expect final solution then.

Important not to raise expectations.

We are happy to discuss

Does Sir Y K have any

future with Chinese when they are ready.

new assessment of Chinese thinking?

3.

Both we and Chinese agree on vital importance of Hong Kong's

continued prosperity and stability. But wonder whether the

Chinese really understand that for confidence to be maintained a

separate Hong Kong dollar would be necessary. Have they also

taken into account the vast network of commercial and other

international agreements from which Hong Kong at present benefits

through the UK's adherence. What does Sir Y K think?

Invitation to Gu Mu to Visit UK [If raised]

4.

The invitation to Gu Mu is still on the table, and it is

for the Chinese to let our Embassy know if Gu want's to take it up.

Any attempt by us to push the matter would only end in mutual

embarrassment, particularly as State Councillors' exact duties

are not yet entirely clear.

SECRET

/Soft