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since this would give the Chinese an infinite
capability for mischief and for frustrating our intentions
(t) The course best suited to our interests would be an
informal and disavowable approach to the Chinese when the time is ripe aimed at reaching a tacit understanding about an eventual withdrawal at a suitable agreed date.
(u) The Chinese response to a formal or informal approach would depend very much on whether it suited their policy and interests at the time to take the Colony over and on the strength of our position. The chances of a favourable response would be best if the Chinese were genuinely anxious, for economic reasons, to take Hong Kong over with minimum damage to the economy; our negotiating position would be strongest if we sought to withdraw when the Hong Kong economy was its normal buoyant self and there was no Chinese pressure.
(v) Our position is, however, weak in that we have many
hostages in the Colony in terms of people and assets and no means of bringing significant pressure to bear on China. Its strength will rest on Hong Kong's economic value to China and on our ability to hand it over with that value unimpaired and its trading links with Festern countries kept open. To use this card, changed attitudes towards China on the part of some Western countries will be a prerequisite.
But
(w) The initiative does not effectively lie in our hands:
the Chinese could always frustrate our attempts to negotiate or reach an understanding with them. on the timing of an approach all the considerations indicate that we should make it as soon as thero emerges in China a regime with which we might do business and before the Hong Kong economy starts to run down as it well may in the 1980s.
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/The Worst Caso