TNAG-1258-FCO40-1591-Third-countries-and-the-future-of-Hong-Kong-1984 — Page 161

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NOTE OF CONVERSATION AT LUNCH GIVEN BY SIR J BULLARD FOR MR MATSUNAGA, ADMINISTRATIVE VICE MINISTER AT JAPANESE MFA

Soviet Union

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1PN (25 TV 1983)

1. In a brief exchange about the latest Soviet statement on INF and on internal affairs in the Soviet Union, Mr Matsunaga agreed that the evidence was that the transition to Andropov was not yet complete.

Korea

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2. Mr Matsunaga said that the combination of the Korean airliner incident and the Rangoon bombing had increased the risk of US involvement in some conflagration on the Korean peninsula, although the incidents had also served to consolidate President Chun's position. During his recent visit to Japan, Nakasone had told Hu Yaobang that South Korea was looking for increased contacts with China, and Hu had taken note, while asking the Japanese not to publish this fact. The Chinese were now admitting some South Koreans to their country, and had been noticeably cautious in their reactions to the Rangoon bombing because of their wish to maintain a balance between North Korea and Burma.

Hong Kong

3. Hu Yaobang had told the Japanese that the Chinese detected greater realism by the British in the Hong Kong negotiations and this was enabling progress to be made. The Chinese position was very clear and final; they intended to recover sovereignty by 1997. The plan to establish a special administrative region was designed to ensure prosperity and stability and to preserve the capitalist environment and the Hong Kong dollar. The Head of the SAR would be a Hong Kong Chinese. Mr Matsunaga thought that the Chinese might have taken this line with Japan on purpose because Hong Kong needed Japanese capital.

Philippines

4.

Mr Matsunaga said that the Philippines were in a bad way financially; their foreign exchange was running out and trade was going down. The forces opposed to President Marcos were still powerful and it was not clear who could succeed Marcos. The alternative to Marcos might well be chaos; if there were to be a successor he would certainly need the support of the Army.

If the Philippines went bankrupt

this would have a bad effect on ASEAN, in particular Indonesia.

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