intention of taking the Colony over, then Hong Kong's days will undoubtedly be numbered. At no stage in the turmoil of the Cultural Revolution in China has there been any evidence of such an intention nor do we see it as a likely development of the revolution, now that the worst frenzies of this remarkable phase in Chinese history appear to have passed. The 1967 troubles in Hong Kong were due to the spontaneous reaction by local communists to the cultural revolution in China and there was no evidence that they were inspired from Peking. Communist policy in Hong Kong, as dictated once again by Peking, is now concen- trating as it did before on maximising the economic benefits it derives from Hong Kong in British hands.
The basic threat is the possibility of a calculated change in Peking's policy towards Hong Kong, and this remains. It has been with us ever since 1949. Chinese policy has, however, been essentially pragmatic and not easily turned by considerations of short term advantage. In our relations with them over Hong Kong we have had our ups and downs, our alarums and xcursions, in the 50's as well as the 60's. But their policy has, for strong reasons of economic advantage, remained consistently firm on maintaining the status quo in Hong Kong. "e would not expect any important change in this respect before the 1980's by which time the tunnel loan will have been repaid.
It does seem to me therefore that the political risk cannot be held to justify the onerous condition of a joint guarantee and that, unless FCGD have good reason to change their assessment of the commercial risk, it would be justi- fiable to reoffer the terms of April 1967, i.e., several (but not joint) guarantees.
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