Tread softly, PWC

IN an interview with this newspaper, businessman and China adviser Vincent Lo Hong-sui has said that the Preliminary Working Committee (PWC) is prepared to seek a greater say in local economic matters during the transition should the two sovereign powers fail to reach agreement on political reforms. His comments serve as a timely reminder of just how finely balanced relations between China and Britain are, as long as the political reforms issue remains unresolved.

The gulf is still wide enough between the two sides that each is preparing contingencies should no agreement be reached. At issue is not just the failure of both sides to find a political compromise, but the broader relationship of co-operation on Hong Kong affairs between Britain and China.

September will be a significant month to gauge the way forward for Sino-British relations. On Saturday, another round of political talks will resume with two more rounds pencilled in before Foreign Minister Douglas Hurd and his Chinese counterpart Qian Qichen meet in New York at the end of the month, where presumably the final decision will be taken on whether a deal is possible. Meanwhile, China's PWC of which Mr Lo is a member will commence its sub-group meetings this week.

Should the worst case scenario take place - that is, no agreement is reached, Beijing will want the PWC to keep a close watch on Hong Kong government policies to ensure they do not jeopardise the work of the future Special Administrative Region government. While Beijing's interests are likely to be served by the PWC, less certain is how strongly the interests of Hong Kong will be represented by PWC members.

Their appointments have not been seen by Hong Kong as representative of the broader interests of the territory, but of business and individual interests. As PWC members prepare to gather this week, they should exercise restraint in their plans to monitor the Hong Kong Government or its policies.

Any attempt to interfere with the Government's ability to administer will send a confusing signal to the public as to who is in charge. It is one thing to monitor major policies such as budgets that have implications that straddle 1997, but another to tryto dictate or influence government policy. While there is a need for both sides to work together on transitional matters, it should not be at the expense of the territory's stability.