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seems to me to add up to self-respect over the longer rather than the shorter term.
LL. What this adds up to in practical terms of preparation seems to me to be that we should study the ideal solution very carefully, and then work it back towards an unpalatable solution and see what is left - even if it is little or nothing. This of course will take a little time, and it certainly demands a study of the assets of Hong Kong held in this country, and the manner in which they might be bargained. (This study incidentally will have to look at a number of technical but important matters like the treatment that might be accorded to Hong Kong currency held unissued in the vaults of the Hong Kong and Shanghai Bank.) Similarly with the trading position.
5. We also need to know how far there is force in the argument that British firms could be as it were "locked in" to Hong Kong as they were in Shanghai in the post-war phase; my guess is that the fixed assets of Hong Kong industry mainly belong to local Chinese capitalists, and there may not be a lot that British capitalists will think it worth putting money into rather than writing off.
6.
This brings me back to what has been referred to in shorthand as a "Macao type solution" As I understand it, the Portuguese seem to contemplate going on under Chinese domination for an indefinite period. But a rear-guard action by ourselves might consist of something like a sharing of responsibility with the Chinese over a short transitional period after which we would have gone for good (unless, as seems unlikely, the Chinese wanted us to stay on for the sake of trade). This would be a most unhappy period, but I do not think that Ministers need be unduly scared by the prospects of being held responsible for all that went on in that period. It might nevertheless be a type of metaphorical bridgehead (even a physical one if we were able to retain a special status in the ceded territories) which would somewhat mitigate the chaos of throwing in our hand.
7. I have tried to mention the outlines of this thinking at the last two meetings, and I was encouraged when you said to me in conversation after the last meeting that your own ideas for an ideal solution might include a period of shared responsibility. I think that where I differ from most of our colleagues is that they see a complete break between an immediate crisis and a long term solution, whereas I think that the two things should be looked at, as far as possible, as part of the same process.
8. I am copying this letter to Rogers (Cabinet Office), Bancroft and Mackay (Treasury), Sykes and Bolland (Foreign Office), Cooper (MOD), and Darlington (Board of Trade).
Yours sincenly Henry
Junkyno
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