CONFIDENTIAL

unpromising. We therefore face the unpleasant prospect of members of our

Mission having to remain in Poking for some considerable time.

6. The Chinese aim has apparently been to try to blackmail us to make

concessions over Hong Kong which in the end will lead to the creation of a

Macao-type situation there. This is clearly unacceptable and all necessary

measures must be taken to maintain control. We should, however, consider

whon taking any specific action the possibility of repercussions on the

Mission in Peking, or on the Reuters representative (who is under house

arrest in Peking) or indeed on any British subjects in China. Any

fruitful negotiations on Hong Kong with the present Chinese leadership

scens out of the question.

7

One of the difficulties in trying to open any dialogue with the

Chinese at the moment is that it is not clear who is in charge in Peking.

There seems to be differences within the Chinese leadership, particularly

in the conduct of external affairs. There is considerable evidence that

members of the Cultural Revolution Group, including Chiang Ching

(Mrs. Mao Tse-tung) together with the Prine Minister Chou En-lai,

intervened to try to prevent the burning of the British Mission on

22 Lugust and that these sane persons are now excrcising their influence

to restore order throughout the country to prevent clashes between rival

revolutionary groups and generally damp down the Cultural Revolution.

Such

e donostic policy might be complemented by a less aggressive foreign policy.

This might include some easing off in Hong Kong. There are already signs

that the local communist leadership are trying to bring this about. (They

may have difficulty in bringing some of the extremist rank and file into

line.) If it were to occur, Sino-British relations might be restored to

something approaching normality and wo night conceivably be able to

maintain a Mission, probably of reduced size, in reasonable conditions.

CONFIDENTIAL

18.

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