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(b) A permanent settlement which placed Hong Kong in a position similar to that of Macau would be unnacceptable to us (though advantageous to the Chinese) in that it would leave us with responsibility for governing but
without the means of discharging it. However, as an interim step towards an orderly withdrawal, there might be advantage in some form of Anglo-Chinese dual control which might preserve our commercial and financial
interests in Hong Kong.
(c) The report should seek to assess the length of the shadow cast on
business confidence in Hong Kong by the impending end of the lease of the
New Territories in 1997. It had been suggested that investment in
Hong Kong would dry up by about fifteen years before this date.
(a) We held considerable sterling balances for Hong Kong, a large part of
them constituting backing for the Hong Kong dollar, which was issued by a non-Government bank in Hong Kong. In favourable circumstances, this might
give us some bargaining counter in negotiating about the ending of the lease
of the New Territories.
(e) The report should also take account of the possibility, unlikely though
that we might negotiate to remain in Hong Kong on satisfactory terms.
it was,
(f) The Governor of Hong Kong (Sir David Trench) had just arrived in this
country for leave and consultations. The Commonwealth Office would consult
with the Governor in preparing the first draft of a report and, if available,
he might be invited to join the Working Party when a draft was discussed.
Summing up, THE CHAIRMAN said that the outline which the Commonwealth
Office had drafted would be revised by the Secretariat to take account of
the discussion, and the revised version would be annexed to the minutes of
the Meeting, indicating which Department should take the lead in preparing a first draft of each section of the report. He stressed the need for
limiting knowledge of the study to as few people as possible;
the papers would receive a special circulation and not the normal circulation for
papers of the Defence Review Working Party.
The Working Party -
(2)
Invited the members of the Working Party to prepare draft
sections for a long-term study of Hong Kong, as indicated in the outline annexed to these minutes.
Cabinet Office, S.W.1.
27th June 1967
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