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J28.2
GOVERNMENT HOUSEŻ
HONG KONG
22 February 1930
香港總督府
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When I was in London in January I agreed with Peter Blaker that the next step should be for you and me to agree a line.
2. I have no regret about having raised the problem of the leases with the Chinese, nor about you having subsequently spelt out in writing a solution to it which we thought would meet both our legal and their political requirements it being understood that the latter involved Chinese options on the future of Hong Kong being kept open. With a bit of luck we might have got a favourable answer. But in any case it was time the Chinese were served notice of this problem. The latter is already concerning businessmen here, including those with China connections, and is understood by NCNA and presumably the Bank of China. One can assume that these different groups and the press will privately and publicly, and with increasing stridency, urge both Peking and HMG to agree a solution before confidence breaks. The Far Eastern Economic Review has already started. So have the members of the Advisory Committee on Diversification.
27/11
3. But we have to face the fact that having proposed a solution and had it rejected so categorically, it will now be much more difficult to secure Chinese agreement to an alternative. Moreover there is no question of confidence breaking at least for the next year or two, so we are in no position to plead extreme urgency.
While therefore we still need Chinese agreement to a solution, we must approach it much more gently, and in my opinion we have time to do so.
4. It is hard to be precise about how much time we have. External events, including actions by the Chinese, could either prolong or shorten the period of confidence. But since 15 years is a standard inortgage it would be prudent
HE Mr P Cradock CMG
PEKING
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