Mr. Moreton

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23/4.

Hong Kong: Long Term Study

Lord Shepherd agrees that the list of points approved by the Permanent Under-Secretary's

Planning Committee (flag B) should be incorporated

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as talking points in the Secretary of State's briefs.

2. On the study, itself, Lord Shepherd has commented as follows:

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"This paper makes sombre reading. We have to accept the fact that China could take Hong Kong at any time of her choosing either as a result of a direct military attack or by making our position in the Colony untenable through organised internal uprisings. Therefore our aim should be to gain time in the hope that circumstances may be such in the future that agreement with China over the return of Hong Kong might become a possibility.

There is, however, one aspect which is mentioned in the paper but, in my view, has not been covered adequately. As we saw in 1966, it is possible for genuine grievances to be fanned by communists into riots which quickly get out of control.

Obviously we cannot hope to avoid all grievances; but I think we should examine most carefully what changes and developments could and should be undertaken to ease some of the social problems which might become points of friction. For example, could more be done in the field of education? What can be done to channel the activities of youth along constructive lines?

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