TNAG-1257-FCO40-1590-Third-countries-and-the-future-of-Hong-Kong-1983 — Page 206

PERSONAL AND CONFIDENTIAL

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things could degenerate rapidly even before 1997. Mr Luce

agreed, and said that we were trying to get the message

across that negotiating a proper solution would take time, and

that people should not expect rapid success.

5. Mr Wolfowitz said the problem was bound up with Deng Xiaoping,

and his prestige. Against the background of the enormous

upheaval China was going through, Deng had to appear to be

succeeding and to be strong. It was impossible to say whether Deng

personally understood the factors for Hong Kong's success, but

in as much as Deng's modernisation plans were wishfully founded

on the belief that he could create many little Hong Kongs

inside China, this was doubtful. Deng needed to be seen to be

succeeding, both for internal political reasons, and because

of Taiwan. If the Chinese ruined Hong Kong they would find it

much more difficult to secure the bigger prize of Taiwan.

They would also seriously damage their credibility with the

United States.

6.

Mr Wolfowitz stressed the importance of appearances to the

Chinese. Precisely because on most subjects they were dealing from

a position of weakness, it always helped for the appearances to

be otherwise. If their position was openly challenged, they

tended to threaten and bluster in order to reassert themselves

before allowing things to move forward. This had been visible

in their reaction to Mrs Thatcher's remarks in Hong Kong a year

ago, and in the Hu Na case, where they had invested excessive

political capital in trying to over-rule a decision on which

the US Government had almost no flexibility. When they had been brought up against a hard reality they had screamed, but had

drawn the conclusion that they could not destroy US/China

relations for the sake of one tennis player. The US had responded

by trying to give them the means to climb down again; by

treating Chinese visitors very carefully, and by deciding to

liberalise the rules on technology transfer, they enabled the

Chinese to show their domestic audience that the US was trying

very hard.

They had also downplayed those issues on which they

had nothing to give.

17.

PERSONAL AND CONFIDENTIAL