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Macao-type situation
14. The essence of a Macao-type situation is that effective control would be given up to the Chinese communists. What this would mean in practice is outlined in the Annex. It would have the advantage of limiting immediate bloodshed and conceivably might make it easier evontually to surrender the Colony in an orderly fashion. But in practice it would provide no guarantee against future bloodshed, would place us in a position where we had no bargaining power when it came to soeking an eventual settlement and would involve us in humilitation as great as that involved in withdrawal, but longer lasting. Our people in Hong Kong would be the hostages of Chinese communists who would not hesitate to use them ruthlessly to extract
continuing concessions from us. We therefore rule this situation out as
quite unacceptable.
A negotiated withdrawal
15. We have considered whether there is any alternative course by which we
could negotiate with China some modification of our control of Hong Kong on
the basis that we would carry out an orderly withdrawal over a period of
some months. Viewed objectively, there is some reason why the Chinese might
agree to this course, because of the material advantages which they derive from Hong Kong. We do not rule out the possibility of such a negotiation at a later stage if the Cultural Revolution comes to an end and the attitude of
the Chinese Government becomes more rational; and in the longer-term study
of Hong Kong which we shall now carry out we will consider in more detail
that possible situation.
16. The present attitude of the Chinese Government towards foreign affairs does not, however, seen to be governed by rational or economic considera- tions. It is possible that they may accept that we should maintain our control because they regard it as too dangerous to force us cut. But most
of us believe that they would not accept any kind of negotiated withdrawal
on terms that would be acceptable to us or that would differ in substance
from the Macao-type situation which we have considered above. It might be
argued that there is an essential difference that whereas the Macao-type
situation is a continuing one a negotiated withdrawal would be short-term
and would offer the possibility of saving lives. But the moment we show any sign of withdrawing, the Chinese Government will be encouraged to step
up their demands and will certainly wish to humilitate us while on the
other hand the confidence which is essential to the maintenance of our
control in Hong Kong would vanish over night on the announcement of our
intention to withdraw. In these circumstances, we could no longer maintain
any form of administration or have the ability to keep order and we should
have to make an immediate forced withdrawal with the additional humiliation
of having shown ourselves willing to accept for a time a Macao-type situation.
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