CONFIDENTIAL
Points to make
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Ministers fully behind the Governor's proposals.
Chinese tactics attempt to portray this as a change of policy by HMG. Not so - still committed to cooperation and preferably a smooth transition in 1997. But it takes two to tango.
- Chinese have chosen to regard this as confrontation, when in fact it was a serious attempt to square a difficult circle: to meet Hong Kong's aspirations to more democracy while staying compatible with the Basic Law.
- Zhu Rongji's comments at Chatham House an attempt to maintain the pressure. (Hints of abandoning the Joint Declaration and that the row will spill over to affect Sino-British trade). So far Chinese have been careful not to allow this row to spill over; and notwithstanding this morning's Hang Seng fall, so far the markets have taken a long-term, confident view.
- We shall continue to try to get them to talk sensibly about these issues. As Governor has said, these are proposals open for discussion.
Grateful for Australia's support so far, and for anything you can do to persuade the Chinese to be pragmatic.
poldir.austr
CONFIDENTIAL
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