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Withdrawal

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Hong Kong's future must eventually lie in China. is likely to become an issue in the 1980s (when confidence and the economy must inevitably start to run down) or earlier if, in the meantime, Chinese pressures carry the indication that China has a serious intention to make our position untenable. But in present circumstances we need not indeed, we cannot contemplate action to this end.

When we do decide to withdraw we will face major problems (some insoluble) in the discharge of our responsibilities towards the Chinese section of the community (particularly those who are British subjects or who may be vulnerable to retaliation because of their loyalty to the British connection) and in the maintenance of internal security during the period of withdrawal.

The nature of these problems points to the need for some understanding with the Chinese. We can in any case put out of our minds any thought of an independent status for Hong Kong, under U.N. auspices or otherwise. We shall have to hand over sovereignty to China.

At the present time the only solution acceptable to the Chinese would be a Macao-type situation, circumscribing our control over the administration of the Colony. This we must avoid at any time as a step towards ultimate withdrawal.

A unilateral decision on our part to withdraw would be

This a course of last resort in present circumstances. would invite severe Chinese harrassment: they would not acquiesce in our withdrawal at our own speed and in our own

At some way and we could not prevent their interference. future date it might be used to bring the Chinese to the

conference table.

We should preferably offer to negotiate withdrawal at a favourable opportunity in the future, avoiding if at all possible any form of joint control of the administration of the Colony prior to handing over since this would give the Chinese an infinite capability for mischief and for frustrating cur intentions.

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