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time will serve our purposes which are, in order

of priority:

1) to see Mr. Grey safely released in October;

*

ii) to head off any Chinese demands for the release of

batches of prisoners in Hong Kong in exchange for

other British subjects.

I admit that there can be two views on our tactics in

this matter. However, on balance I come down in favour

of Mr. Denson's recommendation that the less said at this

stage the better. If the Chinese really believe us to

be weakening over Hong Kong, this is something that, in

the perspective of the next eight weeks, we should not

necessarily be eager to correct. For the Chinese must

presumably see the release of Mr. Grey as promised as the

initial carrot to start us on the path of repeated

concessions. By demonstrating to the Chinese in advance

that the Grey oase is sui generis and is not the prelude

to such concessions we risk depriving them of a major

motive for letting him go.

(a) Differences of view with Hong Kong

I agree that it remains vitally important that we should

continue to do nothing to encourage the communists to

believe that there are differences of view between

London and Hong Kong. This is something which to

emphasise to the Chinese can only be counter-productive.

Any such assertion would immediately lead them to conclude

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