TNAG-2357-FCO40-3428-Official-visits-from-the-UK-to-Hong-Kong-1991 — Page 68

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CONFIDENTIAL

THIS IS A COPY

THE ORIGINAL HAS BEEN CLOSED UNDER

OI EXEMPTION NO...2.7.(..).

Talks now adjourned. Difficult to predict next steps. Hong Kong has no flexibility left on the big issues. Hope Chinese may now see they have over-played their hand and

back down.

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8.

If the talks fail, both sides will probably have an interest in avoiding public acrimony. We can say that contacts will continue; the project may be delayed, not cancelled. Hong Kong opinion at present seems fairly philosophical. But delay will send a negative signal to international investors etc. We shall need to consider the

implications. But must go on trying to make Joint

Declaration work, cooperating with China to ensure smooth transition while maintaining authority of HKG.

Hong Kong Department

17 April 1991

CC1ABZ/3

CONFIDENTIAL