TNAG-2493-FCO40-3625-Future-of-Hong-Kong-constitutional-development-Chinese-reac-1992 — Page 157

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CONFIDENTIAL

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Reference

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Mr Ricketts

CHINESE STRATEGY

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1. I fell that it might be worthwhile giving you my thoughts on what the Chinese strategy is and might be for dealing with the Governor's proposals. I do not know to what extent this duplicates the work of others.

Current Chinese Strategy

2. I have little doubt that what we are seeing is the "xia da wei" ( blow on the head) threatened before the Governor took up his posting. The Chinese will attempt to turn up the heat on the Governor monotonically in an attempt to get him to publicly recant from his proposals. They will not make counter proposals of their own as this would permit the Governor to have the status of an equal partner involved in negotiations with the Chinese state. They will seek to turn sections of Hong Kong public opinion, and if possible opinion in the UK, against the proposals and cut off, or threaten to cut off cooperation over a wide range of areas.

3. They will not I suspect be constrained by the fear that this might damage Hong Kong. Indeed if they can manufacture a sustained fall in the Hang Seng index then so much the better. However they will be constrained by a fear that there own economic and political interests might be at risk. I also suspect that although the instructions to do this will have come from the top leadership, the MFA's and HKMAO's ability to implement them are not unfettered. They may well have wished to cancel the visit by Zhu Rongji but were unable to do so as he himself was keen on coming to the UK.

4. The Chinese do not at present intend to compromise or back down. If the governor sticks to his guns and acts "unilaterally" to implement his proposals then the Chinese will at the very least take the sort of action suggested by Peking and hinted at in the Hong Kong press tefinsure that the Hong Kong press to ensure that if possible the 1995 elections are not seen as credible, e.g. setting up their own elections in Shenzhen and persuading some in Hong Kong, particularly the CRC to announce that they will not participate in elections not sanctioned by the PRC.

5. That is not to say that the Chinese will not at some point decide that they are doing more damage to themselves than they are to us, and seek a way out. But that that would require a change of policy on their part and is not built in as a possible scenario in their current plan. How far we

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