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Summing up the discussion, THE CHAIRMAN said that the Treasury might take the lead, in consultation with the Commonwealth Office and the economic Departments, in a study of the economic effects of our being no longer in Hong Kong. The Foreign Office should consider the sections on the advantages which China derived from Hong Kong and China's intentions towards the Colony; it was of course difficult to assess Chinese intentions in the future when the cultural revolution could be supposed to have come to an end and a rational government to have emerged. In calling for a long-term study of policy, Ministers wished to see whether a settlement with China was possible in advance of the ending in 1997 of our lease of the New Territories, and in the light of this would wish to consider whether there was any action
It we should take in the short term to facilitate any such settlement. was not of course envisaged that any settlement would be possible in present circumstances, but we should now consider what arrangements we might eventually reach with China when a more reasonable Government there had emerged. The Commonwealth Office should consider the draft report as a whole and circulate a revised draft when the study by the Treasury of the economic consequences
of being without Hong Kong was available. While it was difficult at this stage to draft conclusions, it would be helpful if the Commonwealth Office, in consultation with the Foreign Office, could draft a concluding section as a basis for discussion. Although priority should be given to the immediate study of contingency planning, the aim should be to circulate a full draft report in time for another meeting of the Working Party in early
September.
The Working Party
(1) Invited the Treasury, in consultation with the Department
of Economic Affairs, Commonwealth Office and Board of Trade, to prepare a study of the economic consequences to the United Kingdon of no longer possessing Hong Kong.
(2) Invited the Foreign Office to revise the sections on the
advantages China derived from Hong Kong and Chinese intentions towards the Colony in the light of the points made in discussion.
(3) Invited the Commonwealth Office, in consultation with the
Foreign Office, to draft a concluding section to the report. (4) Invited the Commonwealth Office, in the light of (1) to (3)
above and of the points made in discussion, to revise the report as a whole and circulate a further draft for consideration by the Working Party early in September.
Cabinet Office, S.W.1.
23rd August 1967
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