TNAG-1621-FCO40-2235-Relations-between-Hong-Kong-and-China-1987 — Page 157

CONFIDENTIAL

Chinese policy towards Hong Kong (Martin Lee) and by this illustration of the strength of quote conservative forces unquote in China (Conrad Lam). They drew particular attention to possible implications for Hong Kong's political reforms. One press editorial predicted (unspecified) negative effects for Hong Kong.

Seng

Keng index closed 82 points down today.

4.

Hary The Hong

Chinese spokesmen and the pro-Chinese media have done their best

to reassure. K Zaishuo, the Chinese senior representative on the

Joint Liaison Group, has been particularly helpful in stressing that

Chinese policies towards Hong Kong will not be changed.

5.

Beyond these effects on confidence it is early to assess with any certainty to what extent the changes could influence the substance of Chinese policies on Hong Kong. Although there is no

reason to believe that the broad lines of policy will change, there

could be some shading at the margin. There must be a risk that the slight resurgence of conservative forces at the centre will lessen the degree of flexibility and creativity which can be shown in addressing individual Hong Kong issues. The topics which could be

most affected are those which we already expect to be the most difficult. On representative government, it could be harder to

reach an accommodation with China if we conclude at the end of

the 1987 Review that an element of direct elections to LegCo must be

introduced in 1988 to satisfy public opinion. On military issues,

voices arguing for a substantial PLA presence in Hong Kong after 1997 may carry more weight. More generally the new correlation of forces which emerges may favour a little the position of those who

believe that Hong Kong's aspirations should be more firmly handled.

6.

We shall have to watch very closely the Chinese performance over

individual current issues to assess whether any hardening of

position or loss of momentum is perceptible. The nature of the

leadership changes consequential upon Hu's resignation may cast

further light on prospects for Hong Kong.

pp

CONFIDENTIAL

Warden

CO Hum