TNAG-1227-FCO40-1540-Visit-to-the-UK-by-Sir-Edward-Youde--Governor-of-Hong-Kong---1983 — Page 7

FUTURE OF HONG KONG

1. Following consultation with the Unofficial Members of EXCO,

Ministers have now considered the future course of the talks, in

particular the risk, as a result of Chinese intransigence, of an early breakdown with consequent severe damage to the Hong Kong economy and to the well-being of its people.

2. The British Government's aim throughout has been to preserve

the essential freedoms and commercial and financial vitality of Hong

Kong. They continue to see the best interests of Hong Kong people being served by a negotiated settlement, to the successful implementation of which both Britain and China would be committed. They recognise that confrontation would bring severe and possibly irretrievable damage in its train, and have therefore considered other ways of making progress consistent with the Prime Minister's

letter of 10 March.

3. Against this background you should seek an early meeting with

Vice Foreign Minister Yao Guang at which you should convey the following message, saying you are speaking on the instructions of

the Prime Minister.

Begins.

4. The Prime Minister recalls her visit to Peking in September 1982

and the important discussions she then held with Chairman Deng Xiaoping and Premier Zhao Ziyang. At the conclusion of those talks both sides agreed to hold diplomatic discussions on Hong Kong with

the object of maintaining its future stability and prosperity.

British Government remain of the view that with statesmanship on

both sides an agreement can be achieved that would be in the interest of both Britain and China and, most important of all, would continue to assure the well-being of the people of Hong Kong.

The