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CATHAY PACIFIC AIRWAYS LIMITED
Union House, 9 Connaught Road, Hong Kong
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Member of the Swire Group P. O. Box
Cables: AIRGATHAY
Thez: HX 206
Answer Back- SWIRE HKG Telephone: 1-248064 1280011
1st May 1972
The Hon. C.P. Haddon-Cave, J.P..
Colonial Secretariat,
HOC KOEG,
Dear Philip,
Before you departed you asked if I could let you have some of the
background information relevant to air services between Hong Kong and
Chiną,
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As I see it, the basic document is the Hong Kong Colonial Secretary 'o
letter to Hong Kong Airways and Cathay Pacific of 4th July 1949 (copy
attachmi) which sets out those routes allocated to Cathay Pacific and
the routes to be allocated to Hong Kong Airways in terms of traffic
rights.
In 1959 it was decided by Jardine Matheson and 9.0.A.C., the then
shareholders in Hong Kong Airways, that the company would be sold. All
the shares in Hong Kong Airways were first purchased from Jardine
Matheson by 9.0.A.C. and subsequently there was an agreement between
Jutterfield & Swire (Hong Kong) Ltd., Cathay Pacific and B.0.A.C. which
resulted in Cathay Pacific purchasing Hong Kong Airways from 3.0.A.C.
this arrangement, B.O.A.C. became shareholders in Cathay Pacific.
At the same time, and as part of
The main assets of Hong Kong Airways at that time were the traffic
rights described in the Colonial Secretary's letter of 4th July 1949,
and a reference to this letter and the rights which were being
transferred to Cathay Pacific, the new purchasers of Hong Kong Airways,
is embodied in the agreement between Butterfield & Swire (Hong Kong)
Ltd., Cathay Pacific Airways Ltd, and B.D.A.C. This agreement is dated
18th June 1959.
As discussed prior to your departure, we have now had an opportunity of
talking to Sir John Keswick. John Browne has also discussed this matter
with the Governor who has suggested that we should take no further
action at this time pending further reactions from the Chinese
authorities, circumstances we will of course do nothing more for the
present.
In these however like to confirm that, in our view, any traffic rights
which may become
I would available for the operation of air services between liong Kong
and Canton, or any other points in China, should, we bellovo, be offered
to Cathay Pacific as the owners of Hong Kong Airways. I would also
confirm my verbal advico that we have a positive interest in any such
rights, and do not believe that .P.A's operations to Taiwan should be
considered as preventing us from opérating any available China rights in
some form,
Enc. DRY9.JC
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Yours sincerely,
D.R.. luck Managing Director.
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The original of thár letter doin C.1.A. 'Government S
D.C.A. Feund file 1946
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Ref: 5/936/47.
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1952.
COLONIAL GTCR LIVANI AT,
LONG fchG.
4th July, 1940.
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Dear Sir,
J
I am directed by the Governor to inform you that a comrunicntion dated
the 27th May 1949, hao been received from hi Secretary of State for the
Colonics concerning the áircursion.. which have taken place in London
between principals of Hegras. Hour: Kong Airways and Kessrs. Cathay
Pacific Airwnye and offler. from the Coloniel Cifice and the Ministry of
Civil Aviation, ao.)- cerning the allocation of air routes based on Hong
Kong.
י.
2. It oppears from this communication that a general aprtexti has been
reached between Hong Kong Airways and Cathy Freific Airways, the main
basis of which is that Cathay Pacific Airways chu exploit the area nouth
of Hong Kong and that Hông Hoag Airagya al exploit the area north of
liong Kong, and that any intrusion by one compary into the area of the
other, except in the case of the service to Macao which it has already
been greed should be oper: la by Hong Kong Airways, and the service to
Kanila where both compania hold equal rights, shall be by agreement
between the companier on reciprocal or other agreed basis.
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3. I am to inform you that this Government accepto in pri.... the above
described division of routes,
4.
It is understood that the proposed initial division o. routes, as
prepared jointly by the two principals is as follc.
(1) Cathay Pacific Airways. The following are the rou bet. the Southern
sphere which C.F.A. have at present in m
Hongkong/Bangkok/Singapore. Hongkong/Singapore direct
Hongkong/Seipon/Singapore.
Hongkong/Bangkok/Rangoon
longkong/Bangkok/Rangoon/Akyat/Calcutta.
Hongkong/Kanila,
Hongkong/French Indo-China.
Hongkong/North Borneo/Sarawak
Hongkong/Indonesia.
T'
It is understood that as regards the route, llong kong/Indonesia, în
Pacific Airways have agreed that it will bẻ undesirable for pres to be
exercised to obtain rights for Cathey Iacific Airways to operate to
Indonesia until such timo as in fact they were ready themselves to begin
operations.
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It is also understood that B.C.A.C. although designated lo operate Route
No.3 in Schedule II of the Anglo Chinese Air Sprecngai (i.e. South China
Seng Circular Route) have now relinquished their claim to this route,ns
part of the general settlement, ever, be noted that the route between
Hong Kong and Singapore in
It shou directions is an arm of the B.C.A.C. trunk route, and that the
Corporation's trunk operatione on this route fall outside ties regional
arrangements.
(11) Hong Kong Airways.
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The following are the router i Northern sphere which Hong Kong Airwoys
have at present in waist-
Hongkong/Canton
Hongkong/zapo
Hongkong/Chonghai
Hongkong/konilo
Hon komaźni
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5. It de understood that boll companies have agreed that neåbher company
chall make man-ncheduled flights into e territory of the other pave by
prior agreemeab.
6. Azrancements are at prevent being made for the establishent by
legislation of an Air Tra:sport Licenging Authority which rịn urant
licencer' to air-carriera to maintain corkajn air-route ta
4
7. Tending the formation of this Air Transport Licensing Authpr107, This
Government to now prepared, subject to diplomatie clearance where
necezanty in respect of foreign territories, la grant to Hong Kong
Airways and Cathay Pacific airwayo temporary permita to maintain the
servicon detailed above, en condition that confirmation is obtained from
both comoonies that ting egrae in principle with the provisions of this
letter.
8. It is considered likely that the Air Transport Licencing Authority
which is to be set up will accept jenerally the proposed division of
routec, but since Government cannot commit theb Authority in advance, it
would be propered to grant temporu, permits valid for one year. The
licences grented by the Authorit will.probably be valid for five years
and would be renownble.
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9. It is considered desirable that fores should be agreed boleros the
two Companies, and between the two Compunice and B.0.4.0. in casor where
they operate the same or equivalent routes. Although 2.1.A. are not
members of the 1.A.7.A. it in understood bhab in the discussions held in
london, all rides exprecsed willin nece take part in a local Traffic
Conference to agree rakos, 1 da proposed therefore that the licences to
be issued wouli take cechizance of this undertaking and meuld provide
tint, 15, the compenice fail to obtain agredrent, farer should te
declied by + Licensing Authority or by the Governor after consultation
with :41 parties concerned (it being understood of couro, Vint_345 the e
of roubes operated under the terma or bilateral apri"ientu belm ilis
Majesty's Government and foreign countries, fired are nor ""Gy subject
to the approval of the Governments of the countrica wila parties to the
agreement).
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10. I am to add that this Government is in accord with Mis rojects':
Government on the principles which should be followed in allocating
routes to ilong Kong Companies:-
I. General Irinciples.
Both long distance Imperial Comunicablong on? locul nervi""" ? have
their part to play in contributing to the ccononic well-left of the
Colony. It is essential to the economic operation of tl. long distance
Imperial routes thet B.C.A.C. should be stle, be enir, intör-stego as
well as end-to-end and other long distnice brein. Regional operators may
also operate on sectors of the trunk router prövided there is additional
sector traffic which D.C.A.0. eranot take on its through services, or if
there is a need for short- stace services or for services catering for
differing clegres of traffic, in addition to, and not competing with,
the trunk servisu. " The operetion of purely regional routes is
primarily the preregutive of the Colonial operating companies and" not
of 1.0.35.,
] though E.0.A.C, might in special circumstances operate regional
services at the request of the Colonial Government.
II.
Definition of Regional Routeg.
The following definition of remional youtes in the F ban been set out to
show those router which is Frjesty'e "re.nobisfied should be left to the
discrtion of ülis Gove... to allocate and those ou which Rig. Bajonly '"
Government Wenla to be consulted, before authority to operate was given
to ʼn loml Company:-
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21/2
FED
British Embassy Stockholm
30 October 1972
JTT Boulton Esq
Aviation and Telecommunications Department FCO
SAS SERVICES TO CHINA AND HONG KONG
1.
Thank you for your letter of 16 October to the Head of Chancery with its
useful information about the visit of the Chinese civil air delegation
to London last month.
2. I passed on the gist of your paragraph two to Jan Kronholm of the
swedish Foreign Ministry. Ile seemed quite interested, but he commented
that there was a considerable queue of countries wanting to negotiate
air service agree- ments with the chinese and that both we and the
Nordic countries were far down the list. He mentioned that china has
recently concluded agreements on overflights with Iran and Turkey
(presumably en route to Romania), and was actively negotiating with
canada, Ethiopia and Switzerland. Kronhola himself is going to Oslo on
31 october to concert with the other scandinavian members of SAS the
drafting of their Civil Aviation Agreement mentioned in Sheridants
letter of 13 October to Cronartie), but he does not think that any
substantive negotiations will begin until the spring of next year.
Kronholm commented in passing that the Chinese were not really
interested in joining ICAO in the near future. Their experience in
international organisa- tions is limited and they are still feeling
their way, and they are not at present looking beyond their next
objective, which is membership of JMCO.
3. Kronholm also discussed the familiar problem of SAS rights to use
Hong Kong, and the prospects for the talks scheduled to be held by SAS
with the DTI on 21 November. He said he hoped that we would be more
forthcoming on this occasion than we were in 1968. He felt in particular
that the argument that Scandinavia could not generate sufficient traffic
on an end-to-end basis to justify a service to Hong Kong would not
really wash, since it was now standard civil aviation practice for
long-distance services to pick up ad drop passengers en route, (ie in
the Middle Fast and Indo- China in this case). This point will
presumably be pressed in London. He added that the Nordic delegation
would be
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led by Bogh, a Norwegian diplomat who is now a senior official in oslo
after having spent several years as Counsellor in London. The Swedish
component may well be led by the head of one of the divisions of the
Commercial and Economic Section of the Swedish Ministry of Foreign
Affairs, named Herr Hans Everlöf, though this is not yet certain.
Kronholm enquired whether these were big enough guns to set against a
DTI Under-Secretary.
4. I enclose an extra copy of this letter.
Rnc
Copy to:
Chanceries
Oslo
Copenhagen
CRL de Chassiron
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3/56
CONFT DENTIAL
BRITISH EMBASSY
PEKING
2 November 1972
H 13 Davies Esq
Far Eastern Dept
FCO
Asar Hugh
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2.D IN LEIN
R. RLU,
TRY NA 50
1972 !
CHINESE REPRESENTATION IN HONG KONG
XX
Enter
I have amended in manuscript the record of the talk witte Chi,
in accordance with
1227(behind).
Pekking te wo
1. In addition to the official record of the Secretary of State's third
meeting with Chi P'eng-fei, at which Chi raised the issue of Chinese
representation in Hong Kong, we thought you and Hong Kong might like to
have a full verbatim account of the exchange. I am therefore sending a
copy to you and copying this letter and the transcript to Tim George.
Also attached is a verbatim account of exchanges on the same subject
between the P.U.S. and Chang Wen-chin.
c.c. T George Esq
Hong Kong
Yeurs sum
Xrichael
(M J Richardson)
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EXTRACT FROM THE RECORD OF A MEETING BETWEEN THE
SECRETARY OF STATE FOR FOREIGN & COMMONWEALTH AFFAIRS
AND HE THE FOREIGN MINISTER CHI P'ENG-FEI
TUESDAY 31 OCTOBER
CHINESE REPRESENTATION IN HONG KONG
1.
trouble
Mr Chi said that since the Secretary of State had raised the question of
a Consular Convention he thought it would be good to mention some other
things in principle now. One of these questions was that of China
setting up an official representative in Hong Kong. There was not much
that they needed to discuss today about Hong Kong it self. The Chinese
Government's policy
and they and line about Hong Kong was clear to the British Government
whe thought the Balak) (understood, them, The present position of Hong
Kong was a legacy
of the past. The Chinese Government felt that to help the authorities in
Hong Kong to administer Hong Kong well so that there would be no
unnecessary harm to relations between China and Britain, it was
necessary to have an official Chinese
representative in Hong Kong. The Chinese side had raised this question
in 1956 but up to now had not received a satisfactory
answer from the British Government. The Chinese side understood
that in the past there had been no satisfactory answer from the British
Goverment because in those days Sino/British relations
were still in a state of semi-relations. Now the situation had
changed. The two countries had exchanged Ambassadors and had full
diplomatic relations. It should therefore be easy to settle this
question. Mr Royle when he came to China had had discussions with
Vice-Minister Ch'iao Kuan-hua on this question. The discussion between
them had not been very happy. Mr Royle said that if a Chinese
representative were posted to Hong Kong it would disturb the balance in
Hong Kong and would result in more harm than good. The Chinese side
failed to understand this view. Their view was different, contrary in
fact. If there was a Chinese official representative in Hong Kong it
Hong Kong authorities
Some
to deal with any matters, and
would help the
facilitale
be
would help
at.
between
velopment of
/Sino/British
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Britain and
лей сніга
Sino/Zzstioh relations. He did not need to elaborate the
Bat
They
did
reasons for the necessity of a Chinese official representative in Hong
Kong: if one were posted there he would be able to deal with problems
such as communications, trade, travel, the water supply and border
incidents. If a Chinese official
have timely discussone representative was there he could out with the
Hong Kong authorities very kindly (sie), to solve these questions and
Bould not become complicated. If there was no such representative then
things had to go through many processes and did not run so smoothly.
Misunderstandings might result. There was for instance the question of
civil aviation about which Britain hoped to negotiate with the Chinese
Government. There was also the question of direct/communications between
Hong Kong and Canton. So in terms of facilitating the settlement of
these questions in good time, the presence of a Chinese official
representative in Hong Kong would be good for
good Hong Kong and for relations between the two countries. Questions
could be settled and understanding strengthened. That was why he wished
to take this opportunity to raise this matter. Now was the time to solve
this question. In the past
conditions and time had not been right. Now they were. Naturally
concrete details could be settled between officials.
ripe
2. The Secretary of State said that he agreed with the Minister about
the long-term handling of the Hong Kong situation. They both understood
that now was not the time to raise that particular problem. Since Mr
Royle's visit he had given very close and careful consideration to the
question
raised with Mr Royle about a Chinese official representative. As the
Minister knew, the Hong Kong situation was one of
extreme sensitivity and delicacy. Britain was now just beginning to mend
her relations with China, which as he had
said the night before, had in the past been uneven. He did
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not wish to disturb that process. He felt that any disturbance in Hong
Kong would damage Sino/British relations
at a time when the British Government wished to build on what
they had begun. So he really had no more to add to what
Mr Royle had said, but he would take careful note of what the
Minister had said. He was afraid that the establishment of
such an office in Hong Kong could do great damage:
damage: he wanted Sino/British relations to proceed satisfactorily and
he would
be anxious about them if he was to change his mind. He understood that
in Hong Kong there was the Bank of China, the China Travel Service and
the New China News Agency: they not function adequately? There were a
lot of Chinese activities in Hong Kong covering the questions that the
Minister had raised.
did
3. Mr Chi Peng-fei replied that these were professional organs which
could not play an overall role. The Secretary
of State asked what an overall role would be? Mr Chi P'eng-fei
said that such a role would be to maintain normal relations
with the Hong Kong authorities, enter into consultations with them, to
settle questions, to ask and receive instructions from their respective
Governments. He thought that the Secretary of State's argument that the
proposal would disturb the balance in Hong Kong was illogical. The
Secretary of State had said that he would take notice of what he said,
but he would also respect what Mr Royle had said. There was not much
reason in this. The Chinese side placed hopes that relations between the
two countries would develop. But besides economic and cultural links
there was the concrete
situation in Hong Kong. In Hong Kong many diverse affairs
had
ધર્મ ના
needed to be handled. If there was no Chinese official representation it
would affect the two countries, rationu, The Seratami
was very clear about the policies
/settlement of
Chinese devernment towards Hong Kong.
The
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What he
the Hong Kong question was a matter of the future. was now asking for
was no more than the appointment of an official Chinese representative,
to facilitate the
about Mage)
administration (Chinese (sic) in Hong Kong, to know their conditions, to
settle questions, and deal with business. Nothing else. If there was a
Chinese official representative in Hong Kong, order in Hong Kong would
be improved. Take the situation in 1967.
967. The British side was not satisfied with that situation. The Chinese
side regretted it too. That situation broke out because there was no
overall Chinese official representati on in Hong Kong to take care of
such things. If there had been such incidents could have been avoided.
So the setting up of an official Chinese representative in Hong Kong
would do only good and no harm: the Secretary of State could rest
assured about that. The Secretary of State had said that relations
between Britain and China should develop and he was discussing this
question very frankly. The Secretary of State might think that in
proposing this question the Chinese side had an ulterior motive. But
their purpose was only to help the Hong Kong authorities and to settle
questions together with them, so that things in Hong Kong could be
better.
Kong could be better. To look at it in another aspect, he might say that
the Secretary of State had expressed the wish that relations between
Britain and China should develop. Relations between Britain and China
were no mal now. Many countries maintained official offices in Hong Kong
but not China. This was illogical and unreasonable. He did not
understand why the British side should have set up such a barrier It was
not compatible with reason and equality. The Chinese view was that the
on this quaskan
setting up of an official Chinese representative would be only
beneficial and would bring no harm. In 1956 it had not been possible to
come to an agreement on this issue and that was understandable in view
of conditions at that time.
But now
the relationship between Britain and China had developed
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/further....
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there
further. If this question remained unsolved things would be
problems
happen, which might lead to unpleasant things between the two
Governments not too serious but nevertheless unpleasant.
That was what he meant when he said that it was time to settle
the question. The overall role of a Chinese official representative in
Hong Kong would not be anything special: he would just be in general
charge of Chinese Government
affairs there. Now was the time for serious discussion on
this matter, which would be good for relations between the
two countries.
4.
The Secretary of State said that he would be equally
frank. He himself attached great importance to the creation of a most
intimate relationship with China, This was something
which in the two years since they had taken office the
Conservative Government had paid much attention to. Even given
that desire, it had not been an easy political decision, a very
difficult one in fact, when they had decided to end their
previous position on Taiwan and say that Taiwan was part of
China, and to remove their Consulate in Taiwan. This was a
big decision in relation to what had gone before. The Briti ah
people needed time to get used to this view and to a fuller
relationship with China. The change had been made by a
Conservative Government. He looked upon the absence of any friction in
the years ahead in this regard as an overriding
political consideration: no friction should disturb this
improvement. The Hong Kong situation was a sensitive one. He had
therefore to say that although he noted the Minister's intentions, and
the interpretation he put on the function of the individual whom he was
asking should be appointed in Hong
Kong, to take charge of Chinese affairs, he could not feel that
the time was safe to do such a thing now. So he took note of
what the Minister had said, but taking Britain's relations with China
into account to the fullest possible extent, he had to say no to the
Minister's request.
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5.
Mr Chi P'eng-fei said that the Secretary of State had said that it would
not be safe to do such a thing now. In what way would it not be safe?
The Secretary of State said that it would perhaps be better to change
the word to desirable. He thought that the proposal could cause friction
within Hong Kong and the last thing he wished to see was friction which
could disturb the relations between the two
countries. Any such friction would cause worry at home after what had
been a big change in Britain's policy to China.
Time
was a great healer.
6. Kr Chi P'eng-fei said that the Chinese Government had
appreciated some of the policies which the Conservative Government had
pursued since entering office, eg entry to the EEC and the improvement
of relations with China. But his
impression was that the Government was still very conservative. They had
decided on the principle of improving relations with China Why did they
do so in such small paces and not bigger ones? They
They might be left behind, Negotiations between the two countries about
diplomatic relations had not come to a head because for 22 years the
British had not been able to take a decision over representation on
Taiwan. The Chinese side
appreciated the British change in policy, but only so long as it meant
going forward. They thought generally that they were still behind the
times. Only when other countries had recognised
China did Britain catch up. Over Hong Kong they had again
adopted the policy of waiting for the times. The Chinese side was not
making any request. He thought it was entirely proper for the Chinese
Government to raise this question. He raised it in the spirit of wanting
to develop the friendly relations
alt and go forward, between the two countries. The Secretary of State
had referred to loss of balance and lack of safety. He believed that his
observation of the Hong Kong situation was not in accord with reality.
The Secretary of State had said that he did not want friction in Hong
Kong. If the question was left unsolved
/frictions....
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They
frictions would naturally arise. The Chinese side could not guarantee
that frictions would not arise. So in raising this question they had no
intentions other than to facilitate
relations between the two countries. The British Government
Was ciege quout The Chinese Government's general policy
were in no hurry to recover Hong Kong. They proposed to have
an official Chinese representative in Hong Kong only to help in various
respects in Hong Kong, and the official representative
would be able to explain the policies of the Chinese Government
to the Chinese people in Hong Kong: they would tell them about
the new relations between China and Britain to help get rid of the old
concepts. These old concepts were quite deep-rooted
among the masses.
no friction.
7.
Otherwise it was only empty words to talk of
He wanted to explore this question with the Secretary of State. If the
Secretary of State felt that the time was not ripe to discuss it and
preferred to wait, then it was his business. But he wished to make clear
in advance that if anything should happen in Hong Kong he could say that
they had already had frank discussions on this subject with him and that
the British side would shoulder more responsibility, for the situation
would be such that the Chinese would be unable
to help.
8. This was a big question, a question of principle, to which the
Secretary of State's Government had no doubt already given preliminary
considerations. It was not some thing that
wished to make ở vòng sleep in advance) they could decide today. But he
hoped that the Secretary of
to the matter, explain the Chunast việu State ould give serious
consideration and (reconsider, and respond in) (the spirit of better
relations.
9.
-proved
The Secretary of State said that he took note of what Mr Chi had said.
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EXTRACT FROM THE RECORD OF A MEETING BETWEEN THE PERMANENT
UNDER-SECRETARY OF STATE AND H E ASSISTANT MINISTER CHANG WEN-CHIN -
TUESDAY 31 OCTOBER 1972
CHINESE REPRESENTATION IN HONG KONG
1. Mr Chang said he wished to raise another question which concerned
Hong Kong. Civil aviation links had already been discussed and there was
also the question of through trains between Canton and Hong Kong. There
were connections between this and the question of sending an official
Chinese representative to Hong Kong. In Hong Kong China already had
Government-run agencies and enterprises: all were separate institutions
and none had an overall responsibility. Questions of shipping and
travel, for example, were separately handled by China and this was not
the best method. That morning, Sir Alec had said the presence of an
official representative could give rise to friction in Hong Kong: Mr
Chang could not understand what this friction would be.
2. Mr Chang said as relations between the UK and China improved, more
matters arose in connection with Hong Kong. Each had to be dealt with by
a separate institution, although some were beyond the capacity of an
interested agency.
If merchant ships carried passengers the shipping company could not deal
with them. Similarly, an airline would carry passengers needing visas.
This problem would increase as China began receiving more tourists. In
1956
agreement had been reached on a direct train service to
Hong Kong and some technical arrangements had been made.
Because the Hong Kong side wished to restrict the number of passengers
from the Chinese hinterland, the agreement had never come into force.
China had no desire to send
/large.....
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large numbers of passengers to Hong Kong to intensify the housing
problems which already existed. China could not agree to any method of
balancing numbers entering and leaving China. That method was too rigid
and would only create difficulties. All these problems were connected to
the matter of representation in Hong Kong. As such problems multiplied
there would be more need of this
It would not create problems, but would
Facts bore
representation.
help affairs to develop more harmoniously.
that out.
3. The PUS said that the Secretary of State had taken note of Mr Chi's
remarks at the morning meeting. He would now inform the Secretary of
State of the additional points made by Mr Chang. Mr Chang said he