TNAG-1260-FCO40-1600-Briefings-for-Ministers-and-FCO-officials-on-the-future-of-H-1983 — Page 36

SECRET

HONG KONG : BRIEF FOR CABINET ON 22 SEPTEMBER

Exdia

(4.6)

1. Three sessions of talks in Peking during July/August.

Increasingly tough Chinese line on taking back Hong Kong in 1997 and

on inseparability of sovereignty and administration.

2. At next session on 22/23 September British side will continue to

press arguments for British administration beyond 1997 as providing

best guarantee of confidence and non-interference. In line with

EXCO's views.

3.

If Chinese remain adamant will attempt to draw them out on their proposals while maintaining British position. Chinese may interpret

this as a concession by us. We and EXCO accept this risk.

May be

only way of preventing a breakdown causing irreparable damage. EXCO accept this risk. If necessary, we shall have to refute Chinese allegations publicly.

4. Chinese propaganda campaign continues. Aimed at convincing Hong Kong people of viability of China's plan (Special Administrative

Region) and at forcing us to soften our stance.

Effsen i 78) heamh

5. Our line is that it is the talks that count, not what is said

outside. But growing pressure on us from Hong Kong to say more.

Decline in Hong Kong dollar and Hang Seng Index caused by political, not economic, factors. If talks break down we may have to consider

an early statement explaining our position. Mr Luce in Hong Kong 24-28 September.

41KK040/11

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235EP 1983

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