TNAG-1171-FCO40-1452-Future-of-Hong-Kong-1982 — Page 76

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PEKING 219911Z MAY 32

TO PRIORITY FCO

TELEGRAM NUMBER 293 OF 21 MAY

INFO PRIORITY HONG KONG. (PERSONAL FOR GOVERNOR)

PERSONAL FOR DONALD

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HONG KONG TELEGRAM NOS 523 AND 524 AND FCO TELEGRAM NO. 381:

FUTURE OF HONG KONG

1. I RECEIVED THE SAME TELEGRAM YESTERDAY FROM MY AUSTRALIAN COLLEAGUE. I URGED DUNN TO HAVE THE PAPER MUCH MORE HIGHLY CLASSIFIED THAN ITS ORIGINAL ''CONFIDENTIAL' AND ASKED THAT IT BE GIVEN ONLY THE MOST RESTRICTED DISTRIBUTION. THIS HE WILL ARRANGE. I ALSO ASKED HIM TO ENQUIRE IN WHAT CIRCUMSTANCES THE REMARKS WERE MADE: E.G. WHETHER ON SEVERAL OCCASIONS OR

IN ONE DAY.

2. HUAN'S REMARKS ARE NOT INCONSISTENT WITH THOSE BY DENG TO MR HEATH, THOUGH THEY CARRY THE STORY MUCH FURTHER. ONE HAS THE IMPRESSION OF SEEING THE SECOND PAGE OF THE SAME DOCUMENT. I AGREE THAT SOME OF HIS REMARKS ARE PUZZLING, PARTICULARLY MOST OF THOSE IN POINT E, WHICH ARE CERTAINLY INCONSISTENT WITH THE TAIWAN PROPOSALS. SOME OF THESE REMARKS MAY REFLECT PERSONAL GLOSSES BY HUAN OR MISUNDERSTANDINGS BY THE AUSTRALIANS. THERE IS, HOWEVER, HARDLY ANY ROOM FOR DOUBT ABOUT POINT A, WHICH IS THE CENTRAL POINT, NOR, I SHOULD HAVE THOUGHT, ABOUT THE SUGGESTION THAT CHINA MIGHT START TAKING HONG KONG OVER BEFORE 1997. I CONSIDER IT MOST UNLIKELY THAT HUAN WOULD HAVE MADE THESE

PARTICULAR REMARKS UNLESS HE:

A. KNEW THAT THEY FORMED THE BASIS OF CHINESE THINKING AT

PRESENT.,

3. HAD AUTHORITY TO DO SO.

3. CHINESE MOTIVES ARE LESS CLEAR, BUT ONE POSSIBILITY MUST BE THAT THEY ARE DELIBERATELY FLOATING THESE IDEAS TO TEST THE REACTION, BUT DO NOT WISH TO BE COMMITTED TO THEM AS THEY WOULD IF THEY HAD PUT THEM TO US DIRECT. THEY MUST EXPECT REMARKS MADE TO THE AUSTRALIANS TO REACH US. DESIRE TO AVOID COMMITTAL WOULD

EXPLAIN WHY HUAN DECLINED TO BE DRAWN IN HONG KONG.

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4. THE PHRASE SOMEWHAT CHILLING** IN HONG KONG TEL 523 SEEMS TO ME AN UNDERSTATEMENT. THE RECIPE IS ONE FOR TOTAL COLLAPSE. IT

IS NOT CLEAR WHETHER THE CHINESE ARE AWARE OF THE ECONOMIC CONSEQUENCES OF SUCH A PLAN AND HAVE DECIDED THAT THEY ARE SUBSIDIARY TO THEIR POLITICAL REQUIREMENTS, OR WHETHER THEY REMAIN INVINCEABLY IGNARWNT OF THE ECONOMIC CONSEQUENCES AND OF THE WAY HONG KONG WORKS. IN EITHER EVENT THE FACT THA L THE MESSAGE CAME FROM HUAN XIANG, ONE OF THE MOST SOPHISTICATED AND WELL- INFORMED OF OUR CONTACTS, IS PARTICULARLY DISTURBING.

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