SECRET
to the Chinese too soon and judged that EXCO would not endorse it.
The Ambassador is clearly right in seeing important danger signals in the latest Chinese attitude. The remarks to M. Thorn were obviously intended as a message to be passed to HMG. While they may have been based on a misinterpretation of Sir Percy Cradock's earlier remarks they also show a continuing Chinese preoccupation with their premise. Their argument that HMG still wish to retain a controlling interest in Hong Kong may have been overstated in order to put pressure on us. But we believe that it is based on deep-rooted suspicion, and reflects Deng's own views. On the basis of the Ambassador's reports and the Governor's comments, Mr Luce telegraphed Sir Geoffrey Howe in Athens, giving his views on the position and also commenting on proposals by Sir Percy Cradock for the line which he should take at a dinner which he is having with Yao Guang today. He suggested that although we might have to consider the Ambassador's suggestion soon, it would be premature for us to make any move now. This view has been broadly endorsed by Sir Geoffrey Howe in Athens.
We now await the Chinese reaction to the Ambassador's representations and their response to the papers which we presented on 4 November.
As soon as we receive the Ambassador's report on his dinner with Yao Guang, we shall send you recommendations for the line which our negotiators should take on 14 November. In view of the shortness of time we shall probably have to put these recommendations in parallel to Sir Geoffrey Howe in Athens.
A J Coles Esq
10 Downing Street
Your
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Peter Ricketts
(P F Ricketts) Private Secretary
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