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the situation was and the effect if Sino-British relations deteriorated further. The transition relied on a smooth relationship between the British and Chinese governments. That was now seriously jeopardised. The airport and other infrastructure projects had already been hit. Chinese sovereignty was at stake and Hong Kong could not survive the consequences if things got worse. If the Chinese proclaimed their own machinery of government in advance of 1997, that would polarise the Community and force people to take sides. It was essential that dialogue be resumed. He knew it was difficult for us to withdraw the reform package but the Chinese would not discuss it as it stood. He hoped, therefore, that we could amend our proposals as a gesture of good will to open up a dialogue. If modification of the proposals was left to LegCo then it would not be possible to re-establish cooperation with the Chinese at levels where it mattered. And a cooperative relationship was what was required.
The Prime Minister said that the delegation would understand if there were some matters he could not go into. He had seen reports about the state of the relationship with China and these were not necessarily a hundred per cent right. He understood the concern, but we should look at what had actually happened rather than at the froth and bubble of immediate controversy. He reminded the delegation that he had been the first Foreign Minister to meet the Chinese Minister after Tiananmen Square. He had been the first western leader after Tiananmen Square to visit China. He had had subsequent conversations with Li Peng. Vice Premier Zhu Rongji had been here late in 1992 talking about promoting trade relations. It was important to see that wider relationship. The Prime Minister had made clear to Zhu Rongji that it remained our position that we wanted all aspects of our relationship with China to flourish. We stood by the joint declaration. It was often easier to see the peaks of disagreement than the plain of ongoing cooperation.
The Prime Minister said that the Governor was willing for observations to be made on his proposals. We wanted to see liaison in the Joint Liaison Group improve. We wanted progress on the airport. In general it was important that the relationship was good and was maintained and improved. That was our objective.
The Foreign Secretary referred to his own meetings with the Chinese Foreign Minister. It was not true to say that relations were at rock bottom.
The Prime Minister said that he did not accept that we had taken up a confrontational attitude. We had sought to deal with our differences with China through discussion. We were as committed to the joint declaration as when we
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