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experience of the Hong Kong Government that vast numbers of semi-destitutes from China tend to flow in to the Colony to take advantage of such free board and lodging as a progressive British Government may provide for destitutes in the Colony. The obvious remedy of restricting the free entry into Hong Kong of Chinese immigrants has been shown to be almost completely impracticable and was strongly resented by the Chinese Government when it was attempted. Such restrictions would be even less possible with the Chinese in control of the New Territories and the British boundary running close round the main Island and cutting through the city of Kowloon.
13. A possible compromise which has been suggested for surmounting these difficulties would be to arrange for the following:-
(a) An Anglo-Chinese joint board of management for the
airfield and for the water storage and supply system.
(b) A Joint Municipal Board for the urban district of the New Territories adjoining the British portion of Kowloon.
(c) Chinese Government representation on a Port Authority
for Hong Kong.
14. The third possibility, namely that Britain should cede the sovereignty of Hong Kong to China, retaining a special position under a lease or other arrangement, would have the advantage of enabling British administration of the island to continue, while affording a valuable concession to the Chinese nationalist point of view. But the substitution of a lease for a fixed period would make the handing over of the island to the Chinese more difficult to resist when the term of the lease had expired.
15. To cede Hong Kong to China outright would clearly raise very serious issues. It may well be urged that such a step should not in any case be considered until at least:
(a) It is evident that a strong and just government
has been established in China which has shown itself able and willing to afford security and fair trading conditions for foreign enterprise in China.
(b) The strategic implications of new weapons such as rocket projectiles and atomic bombs (the develop- ment of which may conceivably have given renewed military importance to Hong Kong) have been fully worked out.
Cabinet Office, S.W.1.
23RD OCTOBER, 1945.
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