CONFIDENTIAL
kind of retaliation would only be counter-productive.
It would almost certainly lead to a further tightening
of the screw here, and in this kind of competition the
Chinese, by the nature of their political system and
moral attitude, will always win. Such retaliatory
measures would, therefore, at any rate in present
circumstances merely serve to prolong the argument and
delay a solution. In any case it is important from
the point of view of publicity that we should present,
in contrast to the Chinese, a blamelessly liberal
image to world opinion.
Avoidance of Further Friction If Possible
10. What other means have we at our disposal? It is
always unpleasant, and usually unwise to surrender, or
even appear to surrender, to blackmail.
As I have stated
earlier the Chinese, while not sucking another Macao,
will try to get as good a price as they can (in terms
of concessions in Hong Kong) for ending confrontation
and normalising our relations.
On the other hand, it is also
true that they have their own reasons for wanting a
settlement, but need a face-saving gosture before they
can afford to climb down. Before we investigate this
possibility, however, I must mention what is an obvious
pre-requisite to moving towards an accommodation with
the Chinese: the avoidance meanwhile, as far as this is
/consistent
CONFIDENTIAL