TNAG-2918-FCO40-4193-The-internationalisation-issue--Hong-Kong-Department-paper---1993 — Page 7

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pursuing an even tougher line.

9. US leverage over China and the high-profile US approach to human rights issues there, makes China particularly neuralgic to any sign of US involvement in Hong Kong political issues. The US/Hong Kong Policy Act 1992 (the McConnell Act) required the Administration to report regularly to the Congress on a number of aspects of US relations with Hong Kong and on the development of democratic institutions in Hong Kong. China opposed it (rather ineptly) but dropped the subject after it was passed. The threat of withholding MFN is a powerful lever (para 13 below). There are other areas where the US administration has potential leverage

-

for instance in restricting Chinese access to hi-tech equipment, or by not backing Chinese bids for loans from domestic

or international financial institutions.

10.

Australia and Canada have also been supportive. Japan has potential leverage, but is inhibited from using it by historical

factors, and self-interest. Our European partners have also shown little sign of being willing to risk Chinese ire by using much of their influence in our favour. Other Commonwealth countries lack real leverage with China.

Chinese

11. On multilateral pressure, our options include lobbying through the G7 Summit; in the EC; and at the Commonwealth Heads of Government Meeting (CHOGM). (See Annex for details). re-accession to GATT is another potential pressure point. Ultimately

if relations with the Chinese deteriorated to the

extent that we had nothing to lose - we could turn to the United

Nations (UN) and the International Court of Justice (ICJ).

Assessment

12.

Many countries have their own economic reasons for monitoring Chinese policy towards Hong Kong, and forming

judgements about the likelihood of China keeping the promises she

internat.NAT

JEB

CONFIDENTIAL