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view (which we know is shared by Australia, amd possibly by certain other OECD members) that more could and should be done to mesh HK into OECD activities without stirring institutional worries from the Chinese. Both Ambassadors emphasised they reflected their governments' and not just personal views.

10. The discussion should have given food for thought to all concerned; but my own view is that we still have some way to go to familiarise the HK administration with how the OECD operates, and what the mutual benefits of a closer relationship might be (in this context, I attach a copy of Robert Gordon's speaking notes for the dinner).

the dinner). Taniguchi's briefing note on the next phase of the OECD/DAE dialogue is due to issue very shortly; this should provide a peg on which to hang some further reflections. One important element in deciding how we should proceed will obviously be whether departments in the FCO still see a closer relationship with the OECD as politically useful in wider terms. And the final word will, of course, rest with the Governor on one side and the OECD member states on the other.

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NP Bayne Esq DUSS, FCO AR Paul Esq, HKD, FCO

H Ll Davies Esq, FED, FCO

Political Adviser, Hong Kong D Coates Esq, Peking

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J W D Gray