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Sir D. Allen
Mr. Rodgers
Tup
SECRET
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125
HONG KONG AND CHINA
I
At the Secretary of State's meeting on 18 July with the Commonwealth Secretary and others I invited attention to the confused internal situation in China and said that in our day- to-day relations with China over Hong Kong we might find that the people we had to deal with were not the Chinese Government in Peking but the local provincial authorities in Kwantung, the Chinese territory immediately adjacent to Hong Kong. also said that there was no prospect of our being able to conduct orderly negotiations with the present regime in Peking for the eventual peaceful transfer of Hong Kong to Chinese Sovereignty, but that we should be on the look-out for the possible emergence of a more reasonable Chinese regime with
which we could do business.
2.
Since then internal developments in China have strengthened my view that the prospects for Hong Kong, both short and long term, are not nearly as gloomy as some had supposed.
In the
short term the initiative in Hong Kong is now pretty firmly with us, the local trouble-makers are demoralised, and we have further and quite reliable information that Peking does not
The most recent intend to give them any material support. inciients on the border show that the People's Liberation Army do not intend to aggravate situations caused by local hooligans and indeed the P.L.A. have prevented would-be demonstrators from penetrating from China into Hong Kong territory.
Although
/the