LU Ping raised a few eyebrows when he suggested in April that it was possible that the Hang Seng Index could hit the 8,000-mark if the talks on the 1994/95 electoral arrangements succeeded. Notwithstanding rumours in recent weeks that Mr Patten was about to call off the constitutional talks that have dragged on for six long months, the frenzied buying and selling of the past 10 days, shooting the market past the 9,700 mark, seems to suggestthat political bickering between China and Britain is no longer relevant to Hong Kong's economy. Is it true? Mr Patten and his top aides certainly hope so because it will make it a lot easier for them to decide the next course of action for the talks on the 1994/95 electoral arrangements. On Wednesday, the Governor will be at No 10 Downing Street to present to Prime Minister John Major and cabinet members his recommended negotiating strategy for what is believed to be the final stage of the constitutional talks. Since the Governor announced in his second policy speech on October 6 that only weeks rather than months were left to conclude the negotiations, speculation has been rife that he is to call off the talks given the fact that little, if any, progress has been achieved so far. With pessimism everywhere about a last-minute breakthrough, gloom that the gulf between the two sides over the electoral arrangements could be bridged in the near future, Hong Kong's attention has been focusing on when Mr Patten will terminate the negotiations and press the button for the legislative process. Next week's cabinet meeting will be crucial in mapping out the next step. Mr Patten is expected to seek full authority from Mr Major for implementing a strategy which he considers in the best interests of Hong Kong. Will that include a date for introducing the electoral bill? Probably yes. Will that set a date for ending the talks? Not necessarily. It is highly unlikely that Mr Patten will announce breaking off the negotiations when he emerges from the summit with Mr Major. He is more likely to say that if something specific from the Chinese Government has not happened by a set date, the British side cannot hold back the tabling of the legislation any longer. If Beijing then declares that it will stop talking, the British will respect the Chinese side's decision. It is also possible that the Governor may just set a deadline for introducing an electoral bill - be it in its original form gazetted on March 12 or any other modified package - to the legislature while telling Beijing that Britain is still prepared to continue to consult China if Chinese officials wish it. Superficially, such an option is a non-starter because Beijing has already made it categorically clear that any attempt by Mr Patten to table the bill is tantamount to declaring the breakdown of the negotiations. But that option has its advantages, from the British point of view. Mr Patten's tough, determined and uncompromising image seems to suggest that he is heading for a break-off. Allowing the negotiations to continue indefinitely is an option, but one Mr Patten simply finds unpalatable. The patience he has demonstrated while trying to reach an accord with Beijing since the first round of meetings started on April 22 seems to be running out. Behind the scenes, much work has been done since the summer in preparation for this week's cabinet session. It is not a simple question of either keeping on talking indefinitely or calling the talks off immediately. It is a more complicated process and other options, such as ending the negotiations on a set date, are on the cards. Even decoupling the talks over the 1994 and 1995 elections, although already rejected by Mr Patten, could still be on the table. It is unfair to say the last 15 rounds of talks have resulted in nothing. At least the two sides are now clear on the other's position on all the key issues - the through-train problem, the arrangements for the Legislative Council election committee and functional constituency polls, the abolition of appointed seats on district boards, lowering the voting age from 21 to 18 and adopting a single-seat-single-vote election method. What is unclear is whether behind the determined and tough face maintained by both sides there will be an 11th-hour change of heart - in particular, British officials may be wondering whether China will shift its position if Beijing does finally feel that there is a genuine time-pressure over tabling the electoral bill. Because what is at stake is so important, the British side has to exhaust every possible option before presenting and recommending a final strategy to the cabinet. The consequences of ending the negotiations - whether Hong Kong people would support such a course of action and how Beijing leaders would respond - have been reviewed constantly by Mr Patten and the Executive Council. Superficially, the neatest course is to do just that - after 15 rounds, or more than 130 hours of negotiations, the two sides are still going nowhere. But neither side wants to take this unpopular decision, perhaps for a different reason. Fully aware of the possible ramifications if the talks collapse, China obviously prefers the marathon negotiations to continue with the hope that time will eat up Hong Kong's support for the Patten proposals and so pressurise the British side to agree toa model closer to China's plan. Bold as Chinese officials and Beijing's confidants in Hong Kong may be in declaring their ability to ensure the territory's prosperity and stability in the run-up to 1997, even without an agreement with Britain on the political system, they are under no illusions about the scale of problems lying ahead in the remaining transitional period without the British-Hong Kong administration's co-operation. On the other side of the negotiating table, British officials are equally concerned at the possible consequences once the talks break down. How the economy will be affected and how Hong Kong people will receive such an approach are the British team's paramount concerns. Mr Patten can hardly escape the blame from the community if the economy is seriously affected by a unilateral move to terminate the talks, even though the British side should not be held fully responsible for a collapse. British negotiators can keep arguing that the time constraints for the legislative programme for the 1994/95 elections have left them with little choice, but counter arguments can be put which say the timetable is no more than an artifical one, especially over the 1995 municipal council and Legislative Council elections. There are others who may also argue that Mr Patten is being too rigid in defending the through-train and that he should have conceded more to facilitate an agreement with China. If this kind of attitude, extremely unpalatable to the liberal camp, prevails in the territory, Mr Patten will undoubtedly find it difficult to convince the community that his strategy is in the best interests of Hong Kong. It would be highly risky for Mr Patten to table the bill if his assessment is that any such unilateral move will affect Hong Kong both in the short term and the long run, regardless of the good faith in tabling the bill. Like it or not, many of those in Hong Kong are more concerned with their immediate livelihood than a future political system. The Governor can only expect to go it alone with ease if he can be fully confident that economic activities in Hong Kong can be insulated from the political tussle between the two sides. As Chinese officials rightly pointed out, a clear separation of politics and the economy is quite impossible. Mr Major and his aides will have to assess fully the extent of the impact on Hong Kong's economy before giving a clear directive to Mr Patten onwhether and when to go it alone. If the Government's assessment is that an inevitable short-term shock to Hong Kong would not affect the fundamentals of the territory's future economic growth, it would be highly likely that Mr Patten would table the electoral bill in its original form by a set date, probably later this month or early in December. Whether China is to hold fresh elections in 1997 is unlikely to worry them. Their immediate concerns will be whether the 1994 and 1995 polls are seen to be conducted in a fair and open way which is ultimately acceptable to Hong Kong people. Under such a scenario, one can argue for a clean break, an immediate cancellation of the talks. Of course, this remains an option for Mr Patten to discuss with British ministers. But the advantage of not committing officials to any timetable for ending the negotiations is that it demonstrates Britain's intention to still allow some flexibility and leave open the chance of reaching an accord. Six months ago, if London had ignored a call from Beijing to withhold tabling the electoral bill to facilitate an agreement, Britain would have been more likely to have been attacked for being inflexible. Today, after 15 rounds of talks which have yielded little fruit, China's case for blocking the legislative programme may be weaker. Britain, after all, did withhold the bill for six months to see whether the differences could be bridged. An outright refusal of any British offer to continue consultation even after the bill is tabled may suggest rigidity on the Chinese side, without good reasons to back it up. After all, some may argue that it is time for China to show some flexibility; tabling the electoral bill does not bar the British Hong Kong administration from introducing amendments to the package if a deal can be struck before a final vote is taken by the legislature. Beijing had said in the past that until Mr Patten withdrew his package, there was no question of resuming negotiations. Ultimately, talks did take place even though the Patten package was still on the table. The two sides went a long way in trying to get round problems blocking their attempt to negotiate a deal. Time is running out, but one can never be sure whether a similar degree of pragmatism and flexibility will now emerge, giving the hope of a last-minute accord.