TNAG-2468-FCO40-3592-Most-favoured-nation-status-for-China-Hong-Kong-interests-1992 — Page 7

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MDHIAN

CHINESE CONCESSIONS COULD BE DIFFICULT: THE CHINESE WERE SENDING A WEAK DELEGATION TO THE NEXT ROUND OF TALKS. THEIR INSTRUCTIONS APPEARED TO BE TO STALL. PASCOW SAID A DEAL WAS WITHIN REACH, BUT IT WAS UNCLEAR HOW MUCH THE CHINESE POSITION WOULD BE INFLUENCED BY THEIR WISH TO RETALIATE FOR THE F16 DEAL - DESPITE THE FACT THAT IT WAS NOT REALLY IN CHINESE INTERESTS TO PROVOKE A TRADE WAR.

4. BOTH NSC AND STATE AGREED THAT IT WAS STILL POSSIBLE THAT A DEAL COULD BE STRUCK AT THE ELEVENTH HOUR. IF NOT, THE US WOULD HAVE TO IMPOSE SANCTIONS IN AN ATTEMPT TO BRING THE CHINESE TO THEIR SENSES. THEY RECOGNISED THAT SANCTIONS WOULD HURT HONG KONG, BUT THERE WOULD BE NO ALTERNATIVE.

RENWICK

YYYY

DISTRIBUTION

74

ΜΑΙΝ

73

.MFN AND HONG KONG

RAD

HKD

EASD/ODA

ECONOMIC ADVISERS

PS

ERD

ESED

FED

PS/MR GOODLAD PS/PUS

SIR J COLES

JOINT DIRECTORATE

MR CROWE

NAD

NEWS D

MR MILES

MR HUM

ADDITIONAL

DTI//VIC ST

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