CONFIDENTIAL
now
important/after the disruption in her exports caused by the
Cultural Revolution and with the prospect of a poor harvest
Economically, China has a vested interest in
this year.
a considerable degree of stability in Hong Kong.
8. It is therefore unrealistic to argue that no kind
Nevertheless it may
of dialogue is possible with the Chinese.
still be said that the Chinese terms for a settlement would be
extravagant and unacceptable, that while eschewing violence
they are bent on achieving a Macao-like situation in Hong Kong
by means of quict pressure on British subjects in China and
that they will not settle for less. Although it is impossible
to be quite sure of Chinese objectives, I greatly doubt whether
this is the case. Chinese behaviour points rather to the need
to emerge from the struggle with something to their credit, rather
than to the theory that they are conducting all-out offensive
for a success along the lines of Macao. The abandonment of
violence, the reduction of financial support for strikers and the concentration on the question of prisoners all suggest
an essentially defensive tactic. Their need to rebuild a
following in Hong Kong and their current united-front tactics
point to the same conclusion. We have to bear in mind the
immense loss of face the Chinese have already suffered in having to call off the campaign of violence and admit that the struggle in Hong Kong cannot be won in the immediate future.
CONFIDENTIAL
/Their