TNAG-1176-FCO40-1478-Air-services-between-the-UK--China-and-Hong-Kong-1982 — Page 151

CONFIDENTIAL

We would like to use this dispute to further our aim to

improve the balance in air services between Hong Kong

and China whether we decide to withdraw from the

regional CMU or not. This decision may not be taken

before 30 April. If we do so decide the process of

consultation on this matter could be swept up in the

wider negotiations to replace the regional CMU.

If no such step is taken we may at least be able to

make some limited progress on this narrower front.

Grateful your advice and that of Hong Kong on the

action proposed and on likely reaction from CAAC.

We have tried to pitch our action at a level which would bring significant pressure to bear on CAAC but

would not justify them in acting against Cathay's

Shanghai services. If they did we should of course have

to make a corresponding response.