CONFIDENTIAL
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CONFIDENTIAL
FM FCO
TO IMMEDIATE HONG KONG
TELNO 1040
OF 03143OZ JUNE 91
AND TO IMMEDIATE WASHINGTON
TOP COPY Q DIST
INFO IMMEDIATE PEKING, UKREP JLG HONG KONG, ACTOR
FROM HKD
125
76
YOUR TELNO 1611 AND WASHINGTON TELNOS 1453 AND 1474: CHINA/US RELATIONS: MFN
1. WE APPRECIATE THE PROBLEMS OF CONDITIONALITY WHICH BOTH YOU AND WASHINGTON DESCRIBE AND TAKE WASHINGTON'S POINT THAT IT WOULD BE TACTICALLY UNWISE TO CONCEDE CONDITIONALITY AT THIS STAGE. HOWEVER, WE SEE A NEED TO BE CAREFUL AS TO THE EXTENT WE ARE PREPARED TO GO IN REJECTING CONDITIONALITY. FOR EXAMPLE, THE ''CONDITIONS'' DESCRIBED BY PRESIDENT BUSH IN HIS YALE SPEECH ON 28 MAY ON THE LIMITATION OF THE EXPORT OF MISSILE AND SATELLITE TECHNOLOGY, SHOULD, WE ASSUME, HAVE NO IMPACT ON HONG KONG. SURELY IT WOULD BE DIFFICULT TO ARGUE THAT CONDITIONS OF THIS SORT WOULD BE DAMAGING TO HONG KONG'S INTERESTS?
2.
ON THE OTHER HAND, THE TYPE OF CONDITIONS DISCUSSED BY CONGRESS RECENTLY (WASHINGTON TELNO 1474) DO GIVE CAUSE FOR CONCERN. THERE WOULD BE GREAT DIFFICULTY IN THE AMERICANS ASSESSING THE EXTENT TO WHICH CHINA MIGHT OR MIGHT NOT HAVE COMPLIED WITH CONDITIONS CAST IN THESE TERMS. GRATEFUL FOR YOUR AND WASHINGTON'S ADVICE ON THESE POINTS AND ON WHETHER THE MESSAGE FROM THE SECRETARY OF STATE SHOULD ATTEMPT TO DISTINGUISH BETWEEN TYPES OF CONDITIONALITY.
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WE WOULD ALSO WELCOME FURTHER DETAILS FROM HONG KONG ON THE ACTUAL EFFECT OF CONDITIONALITY ON LOCAL AND FOREIGN BUSINESSES AND INVESTORS. IF AT THE END OF THE PERIOD TO WHICH CONDITIONS ARE APPLIED, MFN IS RENEWED, THEN THE LOSS IS PRESUMABLY LIMITED TO THE LACK OF BUSINESS CONFIDENCE WHICH HAS EXISTED DURING THAT PERIOD. BUT HAVE NOT THESE VERY SAME CONDITIONS APPLIED TO THE BUSINESS ENVIRONMENT SINCE 1989 WHEN THE RENEWAL OF CHINA'S MFN CEASED TO BE A FOREGONE CONCLUSION?
HURD
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CONFIDENTIAL
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