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9. Sir Geoffrey Howe asked whether the tide was running in the right direction in Cambodia. Tan Sri Ghazali replied that to the Vietnamese he said 'time is on our side', but privately he thought that the longer the present situation continued, the greater would be the level of Chinese subversion and Russian entrenchment. The rulers in Cambodia were disunited and the Chinese hoped that a new ruling group would emerge. Mr Donald asked about the 'Vietnamisation of Cambodia - 'demographic change', as ASEAN preferred to call it. Tan Sri Ghazali replied that many of those now entering Cambodia from Vietnam had previously lived there. They had also brought their own relations. In addition, there were a number of ethnic Khmers who, because of the way the French had drawn the frontiers were of Vietnamese nationality, who had gone to Cambodia in the hope of getting good jobs. There was some 'demographic aggression': the returning Khmers behaved like a master race, while the Cambodians no longer regarded the Vietnamese as saviours. Indeed he had had reports of attacks on Cambodian villages by the Vietnamese, acting on their own.
10.
Mr Donald referred to the annual vote on Cambodia in the UN. It was awkward for the UK to appear to support Pot Pot, and it would be helpful if some of the top Khmer Rouge leaders gradually became less prominent. Tan Sri Ghazali replied that the Chinese view was that, for the time being, Pol Pot held Cambodian resistance together. Meanwhile, the Coalition was winning grass roots support in Cambodia, although not for Pol Pot himself. The Chinese realised
that,
in the longer term, he was a serious liability.
11.
Tan Sri Ghazali Shafie asked for the Secretary of State's thoughts on Hong Kong. This was of interest to Malaysia, in view of her investments there. He had visited Hong Kong and China shortly after Mrs Thatcher's visit. China had not wanted to face up to the Hong Kong problem, but was happy that the British Govern- ment were now willing to talk.
12.
Sir Geoffrey Howe replied that discussion was still at an early and exploratory stage. We were trying to discover whether the Chinese appreciated what made Hong Kong work. This appreciation was an essential premise for finding a solution. The talks had to be highly confidential. Mr Donald added that there were many mis- conceptions in Peking, e g their belief that the UK drew huge profits from Hong Kong. Tan Sri Ghazali Shafie said that he thought the Chinese would like the present system, e g of law and administra- tion to continue, but did not want to admit it. Sir Geoffrey observed that Hong Kong was a world of its own, with great vitality. He thought the Chinese would like to see its prosperity continue. Tan Sri Ghazali replied that the problem was to find an appropriate 'flag pole', while maintaining confidence. In practice the UK and China wanted the same thing. He asked whether Macao held any les- sons for Hong Kong. Sir Geoffrey replied that the situations were dissimilar, and Mr Donald added that it was possible that what was arranged for Hong Kong would be followed in Macao, rather than the
reverse.
3.
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