CONFIDENTIAL
152005 MDLIAN 485
It had been an excellent example of practical co-operation between the Hong Kong and Chinese Governments on an issue of great importance to Hong Kong. What Li had said suggested that the Chinese authorities were now deciding on a unilateral basis how many Chinese residents could settle in Hong Kong and, by implication, what rate of population increase Hong Kong could absorb. If this interpretation was correct, it would have serious implications. We would therefore be grateful to know urgently whether the Chinese side continued to accept the principle that the scheme should run on the previously agreed basis, or whether it wished to proceed in a different way.
5. Li appeared embarrassed, and repeated that the NCNA had itself only just been informed of these developments, having pressed Peking since June for a response to our proposal. He personally understood that settlement of PRC nationals was a matter of high public sensitivity in Hong Kong, and agreed that it could only be managed on a co-operative basis. He would try urgently to confirm that this remained the formal position. Meanwhile, he hoped we would not jump to conclusions, or publicise what he had told us. He thought the most likely explanation for what had happened was communications failure between the departments concerned, in response to the strong pressure at Local Level for larger quotas.
6. Ashton reserved the right to make further comments once the Hong Kong Government had had time to consider its position. He could in any case only give a preliminary comment on the substance of the quota increases. The June increase seemed in line with the
Perhaps it was even a response
to our proposal we had made. proposal, though if so, it would have been better to have told us at the time. The same applied to the January increase, which did not seem to relate so clearly to the proposal we had made six months later (because there was no specification that recipients of permits should be mothers of children in Hong Kong).
Comment
7. This is a serious and unwelcome development. Li explicitly denied that any political message was intended. But if it became public that the Chinese were now deciding, without reference to us, how many people could settle in Hong Kong, this would be widely regarded here as an intimidatory action.
8.
It would, however, be out of character with our generally good
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