TNAG-1356-FCO40-1797-Constitutional-development-in-Hong-Kong-1985 — Page 31

CONFIDENTIAL

B

clear that the SAR legislature shall be constituted by

elections (and not through consultation).

4.

These remarks are most unhelpful. The Hang Seng

Stock Market index fell 50 points in Hong Kong in the

course of today and the Governor's view, which is no doubt

correct, is that this storm is unlikely to die quickly.

5. I discussed with Dr Wilson, who is at present in Hong

Kong before travelling to Peking for

to Peking for next week's

week's meeting

of the Joint Liaison Group, whether the Embassy in Peking

should formally express ou r displeasure to the Chinese,

given that this is the first time

that either side has

publicly accused the other of not sticking to the

agreement. Dr Wilson's view, which he confirmed was also

the view of

of the Hong Kong Political Adviser, was that we

should not over-react. Mr Xu's remarks had not been part

of the prepared statement which he read ou t at the

beginning of the conference but had been delivered at the

end in response to questions. We did not want a major row

with the Chinese immediately before the JLG meeting, given

that we needed to secure a number of important decisions

from it (eg on GATT and right of abode endorsements in

BN (O)

passports). He proposed that the Embassy should

nevertheless express surprise at Mr Xu's remarks.

6.

the

After consultation with Mr Renton, we sent

attached telegram to Peking. As you will see, in addition to instructing the Embassy express surprise at Mr Xu's remarks, it instructs Dr Wilson to repeat the point during

JLG discussion. It also instructs him to pick up Mr Xu's

remark that the future SAR legislature might be formed by

"consultations".

22 November 1985

Lo.c. Ehrman

W G Ehrman

Hong Kong Department

CONFIDENTIAL