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INTERIM REPORT BY OFFICIALS
In discussion on the situation in Hong Kong Ministers decided (OPD(67) 20th Meeting) that, since we could not rely on remaining in Hong
Kong on present terns until the lease of the New Territories lapses in 1997, officials should consider our policy in respect of Hong Kong in the long tern, what adaptations of the status of the territory night be possible and
desirable after the conclusion of the present conflict in Vietnam and also
what steps would be necessary if we were forced to evacuate the Colony.
2. We are preparing a wide-ranging study of the position and long-term
prospects in Hong Kong as the basis for consideration of future policy.
But it is very necessary to give urgent consideration to our position if the situation should deteriorate suddenly in the near future. Accordingly
we have prepared first an interim report on the prospects for withdrawal fron Hong Kong if it were suddenly forced upon us.
Chinese Intentions
3. We cannot be sure of the intentions of either the Peking Government or the local communists in Hong Kong. Nor do we know who, if anyone, is in direct control of the campaign in Hong Kong or in the province of Kwangtung which adjoins the Colony. Peking seems to be largely reacting to local
initiatives.
4.
Whether Peking ur the local communists are in control, sone clear conclusions can, nevertheless, be drawn. China derives great material advantages from Hong Kong: in particular, she obtains some 40 per cent of her foreign exchange earnings from the Colony, much the greater part of which would be lost if Hong Kong were incorporated into China. However, in the present situation in China we cannot be certain that this will restrain the Chinese from extreme action. For ideological reasons, which are reinforced by the history of the British connection with China, they have a strong wish to humiliate us and clearly their ends would be best served if they could do this while still obtaining material advantage from Hong Kong.
5. It seems likely therefore that Peking will continue to encourage the local communists to persist in their present campaign against the Hong Kong Government and to use increasingly violent methods. At the same time, providing the Hong Kong Government maintains its authority, it is unlikely that Peking will directly intervene by e.g. sending its armed forces across the frontier. However, if the Hong Kong Government loses control, Peking
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