CONFIDENT IAL
low interest rates. Why also are not they allowed to pull down and redevelop slums near the centre? (Because someone might make a profit by commercial redevelopment?)
There are many other questions like this for which no doubt there are at least some reasonable answers.
8. Alternatively should we start from the premise that Hong Kong being a part of China we should seek Chinese solutions accepting a Chinese capitalist philosophy for the present (acknowledging that the capitalists will make a bolt when they have made their millions and the threat from the mainland grows). Our long term objective on this would be to seek in due course some kind of accommodation with China under which we would accept Chinese sovereignty but try to maintain some kind of rights in Hong Kong for British and Hong Kong Chinese business. The second part of this proposition seems to me cloud cuckoo land unless the Chinese can come to see this as an essential Chinese interest. For the moment the status quo suits them and may well continue to do so for some years, but what if there were another cultural revolution or (however improb- able) a rapprochment with the Soviet Union or an increase in overseas earnings eg from oil, making Hong Kong less attractive and more of a political liability? In any event we shall eventually have to face up to the major problem of British passport holders (unless of course this were solved for us by a Chinese walk in.
In that case they would regard Chinese holders of British passports as Chinese and they would have no more chance of getting out than any other Chinese.)
9. These are among the factors we shall have to look at in the context of the planning paper on Hong Kong, in the context of the Secretary of State's visit. They will also need to be considered in relation to the Secretary of State's programme in Hong Kong. Planning this programme will not be at all easy if we are to ensure that it is a success.
19 December 1975
CONFIDENTIAL
Aston Corkage.
НАН
HA H Cortazzi