TNAG-1240-FCO40-1553-Future-of-Hong-Kong-1983 — Page 99

SECRET

(610)

4. Sir P Cradock's assessment of the progress of the talks and of

the prospects for the resumption in September are in Peking Telno 764. The Department is preparing, in consultation with Hong Kong

and Peking, a paper summarising the present position and

HKKoud4reappraising our strategy. This is intended for discussion on 1

HKKO40/4

1667 Heko

X

September. It will be submitted separately later in the week.

5. FCO Telno 537 authorised Peking to make representations to the

Chinese. Chargé D`affaires in Peking called on Assistant Minister

Zhou Nan on 18 August. Peking Telnos 812-4 report and comment on

the call. Zhou Nan attacked the British position in the

negotiations very strongly. There is no doubt that the temperature

has risen, and that the Chinese are under instructions from the top

to increase the pressure. One point on which Zhou put some stress was the Chinese objection to our consultation with EXCO. This

reiterated a remark by Yao Guang in the talks. We could see this line developed. Our response must be robust but carefully thought

out. We are considering separately.

Chinese propaganda campaign

6.

The Chinese behaved with restraint during the July/August

talks. There is now however evidence that they are resuming and intensifying leaks and propaganda, with the aim of undermining HMG's negotiating position and giving the impression that the resumption of sovereignty by China is inevitable. The main example of this was the People's Daily report on an interview given by Communist Party Secretary Hu Yaobang to Japanese reporters on 15

August. Hu told them that China would recover sovereignty over Hong Kong by 1997 and that the talks were only to discuss how to maintain the territory's prosperity and stability and to ensure a smooth transition. Peking telnos 799 and 800 give details and

comment.

HKK049/47. We have also been watching the movements of Xu Jiatun, the

newly-appointed head of the New China News Agency in Hong Kong. seems to have been playing a much more public role than his predecessor, and recently paid a well-publicised visit to the

He

SECRET