16.
15. Thus there are at present (and for the foreseeable future) only two prospects for liong Kong, 1.s. to remain a Crown Colony or to be reincorporated in China. Whether its return to Chine could ever be muccessfully negotiated or scan accommodation reached on a special status seem quite unprofitable subjects for study at the present time; we may in fact never be in a position to negotiate. Moreover, having regard to the present situation and the value of the Colony to us there are no good re::sons why we should contemplate giving it up.
At some stage, as the lease drews to its conclusion, it is inevitable that confidence in Hong Kong's continuing existence as a separate entity should abb and economic activity should run down, with consequent affecta both on ita viability and its st bili ty. The significant factor is likely to be the point of time when, in an economy used to the rapid amortisation of capital, investora com no longer be sure of getting a full return on their investment before
situation
about China forecloses, de would expect this point to be rasehed not later thes 1985 (probably a few years earlier). This may be the time when, faute de mieux, we should consider negotiatin a settlement with China (if we have not already been forced to the Conference table
or had it wrested from us,
Effect of British Withdrawal from Malaysia/SingADON"
17.
Grisa
Our withdrawal from Malaysia/Singapore is likely to concentrate the attention of our allies on our intentions in Hong Kong. We have no political commitments to any of them in relation to Hong Kong, although we did tell the marioms in 1960 (in reply to an enquiry from Mr. Bertar, the U.S.Secretary of State) that "it is indeed our intention to resist aggression against Hong Kong in whatever form it might come". expect a renesal of such enquiries, probably to test the extent of
our disengagement in the area.
We can
18. China would probably see our withdrawal as the inevitable defeat
It would not be regarded by of imperialist interests in the area,
as a signal or a reason for a Chinese initiative against the Colony. The considerations referred to in paras. 10 and 11 above would continue to apply. But inasmuch as it might be regarded as a weakening