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subend. inenci (2) in (2) 0272751/30
In the present Agreement the Article should be
dropped. The question is one to be dealt with
by His Majesty's Government with reference to
China as a whole.
In view of the present attitude of the
Chinese towards foreign-owned factories in
China, there is not the slightest chance that
they will agree to the privileges proposed for
Hong Kong manufactures under Article X. Any
such privilege by suggesting that the position of
Hong Kong approximates to that of a Treaty-port
will provide another argument for irredenti st
propaganda.
Sir C. Clementi was entirely opposed to
the deletion of Article V or to the limitation
of inland water privileges to Chinese-flag vessels.
He was not prepared to allow the Chinese Government
the exceptional privileges proposed under the
draft Agreement, involving "serious curtailment
of the freedom of the port", except in return
for some such substantial quid pro quo. He
was equally opposed to the delction of Article X.
Any whittling away at the draft would be a mistake
in tactics at this stage. "A defeatist policy
will of course bring defeat".
The Hong Kong and Shanghai Chambers of
Commerce support the draft agreement and are
opposed to omission of Article V or to its
modi fi cation, as a dangerous precedent, but do
not believe that there would be any reaction
detrimental