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7.

COLONIAL

OFFICE

For lingusion in Part

American Involvement.

The Americans make great use of Hong Kong.

It is convenient as a recreational contre for their forces ongaged in the Viet-Nam war, although it is not indispensible for this purpose since either the Philippines or Formosa could serve the same purpose. The Americans also use Hong Kong as their major contro for "China watching". In this role Hong Kong is unique. These two considerations, together with the United States' policy of containing China, make it certain that the Americans would wish us to stay in Hong Kong at least as long as there is a Communist government in Poking.

8. Ono of the factors which prevents Chinese military involvement in any noighbouring country (1.0. India or Viot-Nam) is the foar of American nuclear rotaliation against Chine.. The Chinoso leadership appoar to be genuinely convinced that the Americans wish to attack China and, despite thoir propaganda about nuclear weapons being "paper tigers", thoro is little doubt that they take seriously the threat of a massivo nuclear attack. Although this foar does not provent China from pursuing policies of hostility towards the United States it does seem to prevent them from pushing those policies to the point of direct confrontation. It is therefore arguable that the Chinese could bó deterred from taking action against Hong Kong by the throat of American retaliation against China. It is, however, probably true that they would only be deterred in this way from military actions against Hong Kong which could be clearly defined as "Chinese aggrossion". It is much loss likely that a deterrent of this sort could put an end to the incitement to subversion in Hong Kong, since the Chinese would calculate, quite correctly, that there is no point at which such subversion can be considered as the justification for nuclear retaliation against China.

[Tale in slip]

9.

Although we believe that the Americans want us to stay in Hong Kong for

The Americans would like us to stay in Hong Kong for as long as possible because of Hong Kong's value for intelligence purposes and its political value as a Froo World enclavo on the mainland of China. For domestic as well as international reasons, however, they would bo very unlikely to be willing to give a public nuclear guarantee for Hong Kong nor for our own reasons would we wish them to do so. There night, however, be advantage.

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