TNAG-1176-FCO40-1478-Air-services-between-the-UK--China-and-Hong-Kong-1982 — Page 140

%

.T

Mr Adams

***

SECRET

нин 18411

No

CGE

6/5

UK/CHINA AIR SERVICES

1.

Enti ASA file

sex

We've

the 1

12:

nearly

shalt lake ich fum 4

mm pla Pi

Please see Mr Thomson's note below.

1214 Jee (13)

بارج

2. From the political point of view I am inclined to think that even if we were having a squabble with the Chinese on Air Services in the course of the coming year, it need not prejudice a negotiation about the whole future of Hong Kong. That question relates to problems like sovereignty and the form of administration after the lease of the New Territories ends in 1997. The Chinese have made it abundantly clear that they wish Hong Kong's prosperity to continue and that it should remain a financial and commercial centre. Air Services might be seen by them as ''concrete problems'' to be settled in a practical way. If the argument became too acrimonious it could affect the atmosphere but I would hope not the basic essentials. There are far too many points of contact and co-operation between Hong Kong and China for that. And we do have interests to uphold (cf Sir Percy Cradock's arguments).

3. I am therefore of the opinion that Mr Thomson's recommenda- tion is sound, on the understanding that we are able to monitor developments and that we are able, if necessary, to extricate ourselves from a really damaging row. We would have in effect three stages:-

4.

(a) the advance warning that we were thinking

of serving notice of termination;

(b)

(c)

actual serving of one year's notice;

twelve months in which to mend fences perhaps on the basis of a new Understanding.

That said, what puzzles me is that there is no strictly UK interest in having this row. The trunk routes, London to Peking, are working perfectly well. The difficulty arises with the regional routes which are essentially matters for Cathay Pacific Airways. We thus seem to be in a position where HMG would be fighting a battle on behalf of CPA against the wishes of the Hong Kong Government. I would have thought there was case for getting the Hong Kong Government and CPA to have worked out their line in concert before we take any action. But I understand that Swires here in London favour a tougher line with the Chinese. Mr Thomson is going to look into this aspect.

5.

(13)

If we are going to threaten to terminate the MOU, we should have ministerial approval. A submission (much shorter and more concise) will be required. To it could be attached a draft telegram of instructions to Peking and Hong Kong, covering the CPA point and giving Hong Kong one last chance to intervene before Sir Percy Cradock acted.

SECRET

*

/6.