TNAG-2103-FCO40-2995-Future-of-Hong-Kong-exchanges-with-the-Chinese-on-the-Basic--1990 — Page 28

CONFIDENTIAL

065164

CONFIDENTIAL

FM PEKING

TO IMMEDIATE F C O

TELNO 400

OF 15080OZ MARCH 90

INFO IMMEDIATE HONG KONG

HKCO12/3

INFO PRIORITY UKREP JLG HONG KONG

TOP C

IN RACISTRY

- 9 APR 1999

REGISTRY TAction Taxon

ра

MDHIAN 1330

YOUR TELNO 539 TO HONG KONG AND HONG KONG TELNO 889.

BASIC LAW: ARTICLES 106 AND 24(4) AND VALIDITY OF THE BASIC LAW.

1. I CALLED ON CHEN ZIYING ON 15 MARCH CHE HAD BEEN UNABLE TO RECEIVE ME ANY EARLIER) AND TOOK ACTION AS INSTRUCTED IN PARA 3 OF FIRST TUR.

2.

CHEN STUDIED THE TEXTS OF THE THREE SPEAKING NOTES I HANDED OVER. HE COMMENTED THAT THE CHINESE AUTHORITIES HAD SET ASIDE A LONG PERIOD IN WHICH TO SEEK OPINIONS ON THE DRAFT BASIC LAW. DURING THAT TIME, THE CHINESE SIDE HAS LISTENED TO OPINIONS FROM THE BRITISH SIDE PASSED THROUGH ''APPROPRIATE CHANNELS''. EVEN AFTER THE CONSULTATION PERIOD HAD ENDED, AND BEFORE THE PRESENT DRAFT HAD BEEN FINALISED, THE CHINESE SIDE HAD HAD NUMEROUS CONTACTS WITH THE BRITISH SIDE AND HAD LISTENED TO OUR VIEWS. THE PRESENT VERSION OF THE DRAFT BASIC LAW HAD BEEN PASSED BY THE BLDC PLENUM. WORK ON IT BY THE DRAFTING COMMITTEE HAD THEREFORE ENDED. THE DRAFT NOW RESTED WITH THE N P C FOR REVIEW AND APPROVAL. CHEN WOULD ACCEPT THE SPEAKING NOTES I HAD HANDED OVER BUT SAW NO POSSIBILITY OF FURTHER AMENDMENT TO THE DRAFT BASIC LAW.

3.

ON THE QUESTION OF VALIDITY OF THE BASIC LAW, I SAID THAT IT WOULD BE HELPFUL IF, FOR EXAMPLE, THE CHINESE SIDE COULD MAKE SOME FORM OF EXPLANATORY STATEMENT ABOUT CONSISTENCY BETWEEN THE BASIC LAW AND CERTAIN PROVISIONS OF THE CONSTITUTION. AS TO THE OTHER TWO POINTS, MY UNDERSTANDING WAS THAT THE N P C HAD NOT YET GIVEN FINAL APROVAL TO THE DRAFT BASIC LAW. IF THE STANDING COMMITTEE WAS STILL REVIEWING THE DRAFT, I HOPED THAT THE POINTS I HAD JUST MADE COULD BE PUT TO ITS MEMBERS. THEY WOULD THUS BE ABLE TO SEE THE PROBLEMS INHERENT IN ARTICLES 106 AND 24(4) AS CURRENTLY DRAFTED. THESE POINTS WERE LARGELY OF A TECHNICAL, RATHER THAN A POLITICAL, NATURE BUT THEY CAUSED US CONCERN. IN THE CASE OF ARTICLE 106, IT WAS A QUESTION OF MATCHING PRUDENT FINANCIAL PRACTICE WITH THE STRICT LETTER OF THE LAW.

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