TNAG-1172-FCO40-1453-Future-of-Hong-Kong-1982 — Page 43

GR 700

SECRET

FM PEKING 228905Z JUN 82

SECRET

TO PRIORITY FCO

TELEGRAM NUMBER 353 OF 22 JUNE

Enter

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Mien opol, Mr. Willans

TOP COFT

?

INFO PRIORITY HONG KONG (PERSONAL FOR GOVERNOR)

PERSONAL FOR DONALD

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Plus 24/6

HONG KONG TELEGRAMS NOS 647 AND 648: FUTURE OF HONG KONG

Y358)

1. I HAVE SOME SYMPATHY WITH THIS POINT OF VIEW. BUT T IS WORTH REMEMBERING THE CONSTRAINTS UNDER WHICH WE ARE OPERATING: THE ABSENCE OF DECISIONS ON POLICY., AND THE VIEW, STRONGLY URGED BY THE GOVERNOR AND ENDORSED IN LONDON, THAT PRELIMINARY TALKS WITH THE CHINESE WOULD INEVITABLY BECOME NEGOTIATIONS.

2. THE CHINESE ARE PREPARING THEMSELVES FOR TALKS WITH MRS THATCHER. THEIR IDEAS, THOUGH NOT FINAL, ARE NOT ATTRACTIVE AND FALL WELL SHORT OF CONTINUED BRITISH ADMINISTRATION AS WE UNDERSTAND IT. WE SHALL HAVE TO TRY TO SHIFT THEM FROM THAT POSITION. WE DO NOT HAVE MANY CARDS. THE MAIN ONE IS SOVEREIGNTY.

3. WE CANNOT REALISTICALLY EXPECT THE MATTER TO BE SETTLED DURING MRS THATCHER'S VISIT, AND THE CHINESE HAVE TOLD US AS MUCH. THE MOST WE CAN PROBABLY EXPECT IS DISCUSSIONS OF THE ISSUES WITH CHINESE LEADERS FOLLOWED BY AN AGREEMENT FOR TALKS BETWEEN OFFICIALS. THE PRIME MINISTER WILL AT THIS STAGE PRESUMABLY GIVE SOME INDICATION TO THE CHINESE THAT SOVEREIGNTY MIGHT BE CONCEDED PROVIDED THE TERMS ARE RIGHT.

4. IT IS AGAINST THIS BACKGROUND THAT WE HAVE TO CONSIDER THE SCOPE FOR PRELIMINARY DISCUSSION. STRICTLY WE OWE A REPLY TO DENG'S PROPOSAL OF APRIL AND SHOULD TELL THE CHINESE THAT MRS THATCHER WILL DISCUSS THESE MATTERS WITH HIM AND OTHER LEADERS WHEN SHE COMES. SUBJECT TO YOUR VIEWS WE COULD INDICATE THAT DENG'S PROPOSALS FALL SHORT OF WHAT IS NEEDED TO MAINTAIN HONG KONG'S PROSPERITY AND THIS COULD EASILY LEAD TO AN EXPLANATION OF HOW HONG KONG WORKS (WHICH THE CHINESE STILL NEED AND WHICH, AS YOU WILL RECALL, I PROPOSED EARLIER). FINALLY, THE CHINESE WOULD PROBABLY FIND IT USEFUL TO KNOW OUR MINIMUM OBJECTIVE FOR THE VISIT I.E. AGREEMENT TO HOLD OFFICIAL TALKS.

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5. SO FAR SO GOOD, BUT HERE Ï PART COMPANY WITH THE GOVERNOR.

HE ARGUES THAT WE MUST BE ABLE TO TELL THE CHINESE IN PRELIMINARY TALKS THAT SOVEREIGNTY IS NEGOTIABLE. BUT TO DO SO WOULD DEVALUE THE MAIN BARGAINING COUNTER WE HAVE AND WOULD PRE-EMPT WHAT THE PRIME MINISTER IS GOING TO SAY. SUGGESTIONS THAT SOVEREIGNTY

MIGHT BE CONCEDED MUST COME FROM HER AND NOT AT OFFICIAL LEVEL

BEFOREHAND. AND EVEN THEN WE CAN ONLY DANGLE THE BAIT SINCE ANY ACTUAL CONCESSION WOULD OF COURSE DEPEND ON THE DETAIL OF THE

SECRET

see

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/NEGOTIAMONS.

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