TNAG-1235-FCO40-1548-Future-of-Hong-Kong-1983 — Page 61

CONFIDENTIAL

4. SOVIET UNION/CHINA

Vice Foreign Ministers held 'consultations' in Peking in October

1982 - first meeting since invasion of Afghanistan. Russians made

a fuss of Huang Hua at Brezhnev's funeral and Huang spoke optimistically about prospects for normalising relations. Chinese have since drawn back somewhat, attacking Soviet policy in Afghanistan

and Indo-China, but sent a fairly warm message to mark 60th anniversary of Soviet Union. Troop reductions on borders might

increase the momentum of talks, consistent with China's stated

interest in step-by-step improvement of relations. But Chinese have

no illusions about Russians and privately continue to say they

believe Soviet Union pose greatest threat to world peace. Prospects

for Sino/US relations should be clearer after Shultz's visit (early

February), but despite interest in access to US technology Chinese

likely to continue to stress their 'independent' foreign policy.

5. HONG KONG

(The PUS is familiar with the background.)

CONFIDENTIAL