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now conscious of the threat which China's strength and aggressive demeanour pose to the Colony. In view of the statements made by the Communists locally and in official Peking organs it is not surprising that many people assume that China can and may destroy, suddenly or gradually, the British administration in Hong Kong. Unfortunately the simplest method of allaying that anxiety, by referring to the large rolitical and economic issues involved, are not open to us because public comments on such matters (as well as diplomatic action) are the prerogative of the British Government and not of the Hong Kong Government, and certainly not of its spokesman.
5.
Confidence both within Hong Kong and abroad must therefore be promoted to a large extent indirectly. If the confidence does not exist then several consequences would eventually follow. If the Communists resume violent assaults upon law and order we shall not be
If sure how far we can rely upon the public to support the Government. the Communists change their tactics, avoid violence, and begin a scientific attack upon the various institutions of Government and our society generally, exploiting grievances and relating them to a general dissatisfaction (as they have openly promised to do) then we shall be faced with a steady of erosion of public support. In such an atmosphere of uncertainty those who could leave Hong Kong would do so or send their children abroad and, because their children would be the better educated part of the younger generation and Hong Kong would thereby be weakened. Externally there will be some direct and immediate results of such a situation. For example tourism can and will suffer if there is doubt about the ability of the Hong Kong Government to maintain peace and stability. It is less certain to what extent our overall trade is affected by these factors but it is generally agreed that in the long term there would be a considerable effect if buyers, who have to think ahead for several years are not sufficiently confident about Hong Kong to put all their eggs in our basket.
6.
That there has been and still is at the time of writing a lull in the confrontation is evident to everyone. It can be related to the Communists' decision as how they wish to celebrate the National Day,
It in an atmosphere of self congratulation rather than of conflict. can be related to possible directives from China showing that economics, and a realization of the extent to which earnings through Hong Kong have been lost since May, are once more taken precedence over politics. Internally it can be related quite simply to a realization of the failure of the previous violent line. Quite openly the local Communists admit that the Hong Kong Police Force had proved too hard a nut for them to crack and they are advocating a change to a more subtle form of subversion, including of course subversion of the Folice Force. well prove advisable to encourage a degree of satisfaction about this lull. It will not be advisable even so far as the general public is concerned to engender complacency. To some extent by talking about the return of peace and normality we may in fact persuade some of the enemy to want such a return. On the other hand even when the public is con- cerned we may have to keep them alive to the danger of the new Communist line. Certainly as far as the Government is concerned every- one should be aware of these dangers and there should be no complacency.
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It may
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