TNAG-2991-FCO40-3566-Future-of-Hong-Kong-constitutional-development-1992 — Page 126

June 1992

SECRET AND PERSONAL

Private Secretary 10 Downing Street

LONDON

THIS IS A COPY

THE ORIGINAL HAS BEEN RETAINED

IN THE DEPARTMENT UNDER

SECTION 3 (4) OF THE

PUBLIC RECORDS ACT 1958

HONG KONG

that Chinese officials are considering holding up their agreement to the financing arrangements for the new airport, in order to exercise leverage over our policy on the political issues, in particular increasing

the number of directly-elected seats in the 1995 Legislative Council elections, and bringing Mr Martin Lee

or other Liberals on to the Executive Council.

Chinese anxieties about major changes in policy

towards Hong Kong are probably based on what they have

interpreted as a number of deliberate signals:

The appointment of Mr Patten as the next Governor.

The Chinese are nervous that Mr Patten will be more

inclined to press ahead with a faster pace of

democracy and to bring Liberals on to ExCo.

The addition of the word "freedom" to the hallowed

phrase "stability and prosperity" in the Prime Minister's statement welcoming the appointment of Mr Patten, and in Mr Patten's subsequent press