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there was ample opportunity then to do so), nor embodied
in the agreement which we had initialled in good faith.
Mr Wang tried to dodge the issue by implying that if we and/or
the Japanese persuaded the Taiwanese to remove the nationalist
insignia from their aircraft and to alter its name from China
Air Lines to something else the problem would be solved.
Sir John Addis properly ruled this out of court as totally
impossible.
4.
If the Chinese press their point we may be faced with
the choice of acceding to the Chinese demand with little
prospect of a satisfactory outcome, or of dropping air services
agreement altogether. Mr Royle may wish to reassure the
Governor that our inclination in that case would be to drop
the air services agreement. If we gave way to the Chinese the
possible ramifications are too many to discuss in detail here.
It would probably mean sacrificing the profitable services
which CPA now run to Taiwan (CPA's earnings on this route
amount to about £8 million a year) for the dubious financial
return to BOAC of operating a prestigious but unprofitable
service to Peking. CFA would undoubtedly expect HMG to
compensate them if this happened. Perhaps more important,
HMG in the Hong Kong context would be seen to be dancing to a
Chinese tune with all the political consequences which that
would entail. On the other hand if we continue to refuse the
Chinese demand we run a serious risk of an attack for following
a two China's policy. If we are attacked on these grounds our
/position
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