CONFIDENTIAL

3. It would clearly be impossible for the Hong Kong

Government to accede to the demands of local pro-communists

without a complete abdication of authority, which would put

them in the same position as the Portuguese authorities in

Macao, As it becomes clear that the demands are not being

met, there may well be further and more widespread outbreaks

of violence which could not be repressed without bloodshed.

If this does occur there will be a grave risk that the

Chinese authorities would react by bringing other pressures

to bear.

4.

Hong Kong has an efficient police force and there are

over 7,000 fighting troops, British and Gurkhas, who could

be used for the maintenance of law and order if necessary.

Depending on the attitude of the local communists and the

Chinese Government it might be possible by sidestepping

Chinese demands and by firm but unprovocative action to ride

out the crisis without any major change in the status quo.

Nevertheless, there remains a grave danger that the Chinese

Government and the local pro-communists will force the

Hong Kong Government to a full-scale confrontation.

CONFIDENTIAL

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