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COLONIAL
OFFICE
7. Hong Kong is in addition a useful trading outpost for China, ospecially
as rogards commercial dealings with countries with whom it does not have
diplomatic rolations. Preliminary negotiations for grain doals with
Australia and Canada have often taken place in Hong Kong. Wostorm firms,
too, can readily make contact with Chinoso commercial organisations in the
Colony.
8. Hong Kong as hostage for our good bohaviour. As montioned in Section B,
paragraph 21 abovo, China could at any timo bring pressure to boar on the
Colony with a view to influencing our policios or actions clsewhere than in
the Colony.
This might be used in the promotion of China's interests
and to tho dotrimont of our intorosts.
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Hong Kong in our hands is of considerable economie value to Ching,
but its contribution to China's oconomy is cloarly not indispensablo. In
its prosont irrational nood, China may woll rogard oconomic advantago as
loss important than doctrinal rectitudo in which caso cortain political
cmbarrassmonts and disadvantagos stomming from the Colony's continued oxistenco may weigh hoavily. Russian jibos about China's tolerance of foreign colonial possossions on its torritory arc embarrassing for its
| imago as a world royelutionary force. Thoro might be somo disadvantago
(ovon porhaps dangor) in the nearby presence of free, anti-Communist influenco
which, in China's prosont divided stato, might pornoato or serve as an inspiration to certain olaments opposing tho prosent regimo.
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