TNAG-2769-FCO40-3986-Hong-Kong-and-the-media-interviews--press-briefings-and-the--1994 — Page 6

1. TALKS

CHINESE CLAIM THAT BY INTRODUCING LEGISLATION WE HAVE BROKEN OFF THE TALKS

Not the case. We have made plain recently that we want to continue discussion of the remaining, more difficult, issues. We have proposed a further round of talks this month for that purpose.

Legislation we are introducing is uncontroversial and demonstrably urgent. It has not proved possible to reach agreement in time on these points. But that is no reason to abandon cooperation in all the many areas where we and China have an interest in working together over Hong Kong.

CHINESE ALLEGE THAT THERE HAS BEEN NO DIPLOMATIC CONTACT OVER OUR PROPOSAL TO CONTINUE TALKS

On 27 November (during Round 17) we proposed an 18th Round to continue negotiations on the more complex issues. Our Chargé reminded MFA on 2 December of our wish to hold 18th Round on 17-18 December. Our Embassy again asked MFA on 14 December for a response to our proposal. But Chinese spokesmen have been very negative in their public statements about continuing the talks.

We want the talks to continue. We have a little more time before we have to present proposals to LegCo on the three remaining issues. We want to use this time to go on talking to the Chinese side in an effort to reach agreement.

CHINESE THREATS THAT SINO-BRITISH TRADE WILL SUFFER FROM THE RIFT OVER HONG KONG.

It would be surprising if the Chinese sought to discriminate against British companies:

enhanced trade is in the interests of both countries at present the balance of trade is firmly in China's favour;

senior Chinese leaders have denied that China would discriminate against British firms;

such discrimination would not sit well with China's ambition to join GATT.

CHINESE ALLEGATIONS THAT WE ARE CREATING TURMOIL IN HONG KONG?

Do not recognise the Hong Kong conjured up in these statements. Hong Kong is prosperous, calm and

self-confident. Business confidence is strong. Britain and China have every interest in keeping thing that way through cooperation

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