CONFIDENTIAL

7. Hong Kong tends to grumble about neglect and to argue that

Britain has a "moral obligation" towards the Colony and that

something is needed to bring home to the people that Hong Kong is

a British Crown Colony for which HMG have a special regard.

8. In public and with the Unofficial Members of the Executive

and Legislative Councils it would be best if the Secretary of State

could confine himself to the formula set out in paragraph 5 above.

However, with the Governor and his official British advisers it

is recommended that the Secretary of State should take the

opportunity to explore the idea of British aid being used more

extensively to further UK commercial and industrial interests.

On his return to London, the Secretary of State may then wish to

consider with Mr Richard Wood how far aid could be used, eg in

connexion with the mass transit scheme, to benefit Hong Kong's

people and British industry simultaneously.

CONFIDENTIAL

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