CHINESE REPRESENTATION IN HONG KONG.

OUR CURRENT ANALYSIS WAS OUTLINED TO SIR LESLIE MONSON. I WOULD LIKE TO
DISCUSS THIS WITH YOUDE NEXT WEEK-END, AND HOPE YOU WILL DEVELOP YOUR
OWN THESIS TO HIM, THE FOLLOWING STATES MY OWN, AS A BASIS FOR
DISCUSSION. I APOLOGISE FOR LENGTH, BUT THERE IS NO TIME FOR A DESPATCH,

2. MY VIEW STILL IS AS SET OUT IN THE GUIDELINES AGREED WITH THE FCO
BEFORE MY DEPARTURE. LOCAL ADVICE CONFIRKS THE PROBLEMS THERE IN
FORESEEN IN SUCH AN APPOINTMENT, AND THE LIKELIHOOD OR EVEN
INEVITABILITY OF THEIR LEADING TO A CONFRONTATION WITH THE CPG RATHER
THAN TO EASIER RELATIONS, UNLESS OF COURSE WE CONCEDE A MACAU-LIKE
SITUATION.

3. COMING AFTER THE ROUND OF SUCCESSES OF THE CPG AS SEEN BY THE PUBLIC
HERE (UN, NIXON, BRITISH CONCESSION ON TAIWAN) AND CHINA'S LETTER TO THE
COMMITTEE OF 24, THEY WOULD CONCLUDE THAT THE EAST WIND PREVAILED AND
THE DAYS OF BRITISH CONTROL HERE WERE MUMBERED AND ADJUST ACCORDINGLY, I
FEAR THEREFORE THAT SUCH A TRANSITION WOULD CREATE MORE RATHER THAN LESS
APPREHENSION AT THIS POINT IN TIME. (PARA 2 OF YOUR TEL)

SECRET

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4.

MY ADVISERS NATURALLY VIEW THIS PROPOSAL AGAINST THE

BACKGROUND:

A)

THAT WE CAN SEE NO PRACTICAL REQUIREMENT FOR IT (AND YOU WILL NOTE IT
WAS PUT FORWARD ON PRACTICAL GROUNDS). IN ONE WAY OR ANOTHER THE CPG IS
NOT UNDER BUT OVER REPRESENTED HERE. ALREADY. OF THE 25 MEMBERS OF THE
CPG WORKING COMMITTEE THAT CONTROLS CPG ORGANISATIONS HERE UNDER THE
PRESIDENCY OF LEUNG WAI LAM, DIRECTOR OF THE NCNA, ALL ARE SPECIALLY
SENT FROM CHINA AS ARE 50% OF THE 160 SENIOR OFFICIALS WHO WORK TO THIS
COMMITTEE. THE LATTER ARE SUPPORTED BY A LEGION OF SMALL FRY. THIS IS A
FAR LARGER SET-UP THAN VE NOW HAVE IN WASHINGTON. THE ADVANTAGE PROPOSED
WOULD THEREFORE BE CONFINED TO POLITICAL STATUS AND INFLUENCE.

B) CURRENT CHINESE POLICY TO HONGKONG,

5.

THIS IS TO RETAIN FOR THE CPG FOR THE TIME BEING THE ECONOMIC AND
POLITICAL BENEFITS OF CONTINUED BRITISH STATUS WHILE WORKING TO
ESTABLISH EFFECTIVE CPG CONTROL IN ALL FIELDS AS ACHIEVED IN MACAU BY
THE RIOTS OF 67. OF SUCH A POLICY THERE IS AMPLE PROOF AS YOU KNOW. THIS
POLICY HAS BEE!! SUCCESSFULLY CONTAINED BECAUSE OF THE PUBLIC'S BELIEF
THAT GOVERNMENT WOULD STAND FIRM AGAINST ENCROACHMENT, HENCE THE
IMPORTANCE OF THE PROPOSED APPOINTMENT WHICH WOULD LOOK TO THE PUBLIC
LIKE A TURNING POINT, AND WOULD BE SO INTERPRETED BY COMMUNIST ORGANIS
AND CADRES.

YOU ENVISAGE AN AGREEMENT WITH THE CHINESE TO LIMIT THE FUNCTIONS OF
SUCH AN APPOINTEE. BUT I THINK SUCH AN AGREEMENT, EVEN IF ACHIEVED,
WOULD BE MEANINGLESS. EACH SIDE WOULD READ A QUIET DIFFERENT SENSE INTO
IT. MOREOVER WITH THE BEST WILL IN THE WORLD THE REPRESENTATIVE'S
POSITION WOULD BE HOPELESS IF NOT SHOT BY A KUOMINTANG AGENT
PROVOCATEUR, HE WOULD BE HEMMED IN BETWEEN HIS INSTRUCTIONS FROM PEKING,
WHATEVER THEY WERE, THE EXPECTATIONS AND CRITICISMS OF LOCAL CADRES, THE
REQUESTS. FOR INTERVENTION BY ANYONE WHO DID NOT EGET WHAT HE WANTED
FROM MC, AND THE HIGHLY COLOURED BLOW BY BLOW ACCOUNT OF HIS ACTIONS AND
OBITER DICTA BY THE LOCAL AND INTERNATIONAL MEDIA.

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6.

ALL THIS IS OF COURSE THE ORTHODOX PRE-EXCHANGE-OF-AMBASSADORS

VIEW. THE QUESTION ARISES WHETHER THE LATTER HAS CREATED A NEW

SITUATION IN WHICH CHINESE POLICY HAS CHANGED AND THE OLD

FEARS ARE UNREAL. MY COMMENTS ON THIS ARE:

A)

B)

1)

THE CASE REMAINS TO BE PROVED.

THE RELEASE OF MRS. YANG IS SCARCELY RELEVANT, AND THE FORTHCOMING
ATTITUDE ON THE PART OF CHANG WEN-CHIN ON SUCH THINGS AS THE CANTON AIR
LINK MAY BE RATIONAL (BECAUSE IT IS VERY MUCH TO CHINA'S ADVANTAGE) BUT
DOES NOT TAKE US VERY

FAR. NOR DOES THE MUCH PLEASANTER ATMOSPHERE IN PEKING.

RECENT HISTORY IS NOT REASSURING,

E.G.

THE WAY IN WHICH THE CPG STEADILY RAISED THEIR DEMANDS IN

THE NEGOTIATIONS OVER THE EXCHANGE OF AMBASSADORS:

THE WAY CHOU EN-LAI'S ORIGINAL REMARKS TO DENSON WERE TWISTED BY CHANG
WEN-CHIN (YOUR TEL 245) AS A LEAD-IN ON REPRESENTATION : ITI) THE WAY
THE HALF ASSURANCES GIVEN BY CHOU EN-LA ON HONG KONG

TO MALCOLM MACDONALD HAVE BEEN FOLLOWED, IMMEDIATELY WE HAD GIVEN THE
CPG WHAT THEY WANTED, BY THESE PROBES ON HONG KONG.

C)

7.

THE YEARS OF THE PRESENT LEADERS ARE NUMBERED AND WHAT AND WHO

WILL FOLLOW THEM WE DO NOT KNOW. THIS IS THEREFORE A TIME TO

SIT TIGHT ON ANYTHING AFFECTING HONG KONG'S LONG-TERM FUTURE.

IT IS UNDERSTANDABLE THAT CPG OFFICIALS IN PEKING AND LONDON SHOULD NOW
BE TRYING TO SEE WHETHER THERE ARE ANY QUICK. POLITICAL TRICKS TO TAKE
ON HONG KONG, BUT AGAINST THIS BACKGROUND THE CASE FOR GIVING THEM
REMAINS TO BE PROVED. I SUGGEST

OUR IMMEDIATE OBJECT IN HONG KONG/CHINESE RELATIONS SHOULD BE
IMPROVEMENT IN PRACTICAL, NON-POLITICAL THINGS WHOSE RESULTS AND BALANCE
OF ADVANTAGE CAN BE CLEARLY ASSESSED. HENCE, FOR INSTANCE, MY PROPOSAL
FOR A DIRECT HONG KONG/CANTON AIR LINK.

-3- SECRET

/8. SINCE

SECRET

8. SINCE THINK THAT THE APPOINTMENT PROPOSED IS LIKELY TO EXACER- BATE
RATHER THAN IMPORVE RELATIONS I AM NOT DETERRED BY THE ARGUMENT THAT IT
WILL ONLY BE THE WORSE FOR HONG KONG LATER IF WE RESIST NOW (SEE ALSO
PARA 6 (C) ABOVE). ON THE CONTRARY I THINK THAT THE CHINESE ARE UNLIKELY
TO PRESS THIS PROPOSAL TO THE LIMIT., AND THAT PROVIDED WE STEER THEM
OFF QUICKLY AND FIRMLY THEY ARE LIKELY TO CONFINE THEMSELVES TO
GRUMBLES. BUT THERE COULD BE REAL DANGER IN ALLOWING THE PROPOSAL TO
GAIN MOMENTUM.

MACLEHOSE

(COPIES SENT TO NO.10 DOWNING ST AND TO

SIR P ADAMS, CABINET OFFICE

FILES

F.E.D.

H.K.D.

NORTH AMER DEPT

PRIVATE SECRETARY

P.S./MR ROYLE

MR WILFORD

SR & mors

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PRIORITY

CYPHER/CAT A

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TO PRIORITY F C O TELNO 393 OF 9TH BAY 1972. INFO ROUTINE

PEKING.

FCO

PEKING TELNO 461: CHINESE REPRESENTATION IN HONG KONG.

I AM AFRAID THAT WITH OUT INITIAL RESPONSE OF REQUESTING DETAILS AND NOW
WITH OUR OFFER TO EXPLORE FURTHER WITHOUT COMITMENT, THE CHIRESE MAY
BELIEVE (QUITE WRONGLY OF COURSE) THAT THEIR PROP- OSAL IS GATHERING
WAY, VERY SOON WE MUST FIRE A SHOT ACROSS THEIR BOWS, OR BE PREPARED TO
LET THEM SAIL OVER US.

2.

HY

FOR REASONS GIVEN IN MY TELEGRAM NO. 31 TO PEKING AND DESP- ATCIL OF 5
MAY I HOPE THE DECISION VILL RE FOR THE FOPHER COURSE, AND IF SO WE HAVE
TO DECIDE WHAT TO SAY. ON THIS PERHAPS HER MAJESTY'S AYDASSADOR, PEKING,
COULD BEST ADVISE. BUT FOR MY PART I SUGGEST THE FOLLOWING POINTS MIGHT
BE MADE :-

(A)

(B)

(C)

WE ARE SORRY THE CHINESE HAVE RAISED THIS OLD ISSUE AT THIS TIME. OUR
DESIRE IS FOR BETTER RELATIONS AS WE BELIEVE IS THEIRS, BUT THIS
PROPOSAL IS LIKELY TO ACHIEVE THE REVERSE. WE THEREFORE FEEL OFLICED TO
SPEAK FRANKLY. MR. CHANG'S INFORMATION ABOUT THE ACTIVITIES OF NR. KWOK,
THE KUOMISTANG COMMISSIONER, AND HIS OFFICE FROM 1945 TO 1949 IS QUITE
DIFFERENT FROM OUR OWN. THIS ''ORGAN'' FAR FROM BEING BENEFICIAL TO BOTH
SIDES, OR DEMONSTRATING THE NEED FOR ITS EXISTENCE, CONTRIBUTED TO AN
EXACERBATION OF RELATIONS WHICH HMG HAS HO DESIRE TO SEE REPEATED,

A LOT HAS HAPPENED SINCE THE PREVIOUS PROPOSALS WERE MADE. IN 1956 WE
HAD AN OFFICE IN SHANGHAI, BUT THE CHINESE GOVERNMENT HAD HONE ON
BRITISH TERRITORY EXCEPT IN LONDON, AND THE POSITION WAS THUS UNEQUAL.
SIMILARLY WHEN CHOU EN-LAI MENTIONED REPRESENTATION IN HONG KONG TO MR.
DEMSON

HE DID SO TO EMPHASISE THE ILLOGICALITY OF OUR RELUCTANCE TO WITHDRAW
THE BRITISH CONSULATE FROM TAIWAN WHEN THERE WAS NO CHINESE GOVERNMENT
REPRESENTATION IN HONG KONG. NOW THESE OFFICES HAVE BOTH DEEN CLOSED,
AND THERE ARE ONLY EMBASSIES IN OUR RESPECTIVE CAPITALS. THIS SEEMS A
SATIS- FACTORY AND MUTUALLY ADVANTAGEOUS SITUATION.

DECRET

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(D)

(E)

3.

SECRET

HR. CHANG HAS INDICATED THE PROPOSAL WAS MADE ON PRACTICAL

GROUNDS. BUT THE CHINESE GOVERNMENT ALREADY HAVE A VERY

LARGE NUMBER OF OFFICIALS IN THE COLONY WHO DEAL WITH ALL PRACTICAL
QUESTIONS OF COMMERCE, FINANCE, CULTURE, INFORMATION TRAVEL, TRANSPORT
AND OTHER MATTESS. THEY ARE NOT HINDERED IN THEIR DEALINGS IN ANY MAY,
AND THEY ARE FREE TO TRAVEL WHERE THEY WISH WITHOUT PERMISSION, AND MEET
VION THEY LIKE AND ENTER AND LEAVE THE COLONY AT WILL. SOME OF THEM.
HAVE DEALINGS WITH MY OFFICIALS AS OCCASION REQUIRES AND VICE VERSA.
THERE IS THEREFORE NO PRACTICAL NEED FOR FURTHER

REPRESENTATION.

J

THE SITUATION IN HONG KONG IS ONE OF SOME DELICACY FOR BOTH THE CHINESE
GOVERNMENT AND OURSELVES, HITHERTO A BALANCE

HAS REEN MAINTAINED THAT IS WELL UNDERSTOOD IN THE COLONY. THE PROPOSED
APPOINTMENT NIGHT DISTURB THAT BALANCE.

ANY SUCH DISTURBANCE WOULD HAVE AN IMMEDIATELY ADVERSE

EFFECT IN THE COLONY AND THUS ON MIGLO-CHINESE RELATIONS.

SINCE. THE CHANGE PROPOSED WOULD BE OF NO PRACTICAL BENEFIT

TO EITHER THE CHINESE GOVERNMENT OR OURSELVES, WE DO NOT WISH TO RISK
THE ADVERSE EFFECT IT WOULD HAVE ON OUR

RELATIONS.

IT IS NOT FOR ME TO ADVISE ON WHETHER ALL OF THIS COULD PROPERLY BE
SAID, BUT I DO BELIEVE THAT AT THIS POINT, WHATEVER CHINESE INTENTIONS
TURN OUT TO BE, WE HAVE MUCH TO GAIN BY CLARITY AND MUCH TO LOSE BY
RISKING MISUNDERSTANDING THROUGH RELUCTANCE TO MAKE OUR OBJECTION CLEAR.

4.

I AM ALSO MOST CONCERNED TO DAMP OFF THE CHINESE BEFORE THEY HAVE BEEN
GIVEN AN OPPORTUNITY TO FORMULATE THEIR PROPOSALS TO US IN DETAIL, ONCE
THEY HAVE DONE THIS IT WILL PE MUCH HARDER FOR THEM TO WITHDRAW. I
THEREFORE HOPE THAT UNTIL HEV MISTRU- CTIONS ARE SENT IN THE LIGHT OF
CHANG'S DEMARCHE HIM, APBASSADOR VILL FEEL ABLE 10 SAY, IF TACNLED, THAT
PERCING I.STRUCTIGNS YE ;}

CANNOT DISCUSS THE MATTER "JRTHCK.

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Ask

TO ROUTINE GOVERNOR HONG KONG TELEGRAM NO. 265 OF 39-MARCH INFO

PEKING,

(

YOUR TELHO 272: CHINESE GOVERNMENT REPRESENTATION IN HONG KONG.

1. OUR UNDERSTANDING IS THAT THE BALL IS NOW IN THE CHINESE COURT TO LET
US KNOW EXACTLY WHAT FUNCTIONS THEY ENVISAGE FOR THEIR 4 REPRESENTATION
(PEKING TELNO 245). WE WOULD NOT INTEND RAISING

RE THIS MATTER WITH THEM AND SHOULD DEFER DETAILED CONSIDERATION UNTIL
WE HAVE A BETTER IDEA OF WHAT THEY HAVE IN MIND.

13

2. OUR PRELIMINARY REACTION IS THAT THE STRIKINGLY MORE FORTHCOMING
ATTITUDE IN GENERAL OF THE CHINESE WITH AR ADDIS ON 27 MARCH HAS CREATED
A NEW SITUATION. NEVERTHELESS, THE PRIMARY, AND INDEED OVER-RIDING,
CONSIDERATION IN THIS HATTER MUST REMAIN YOUR ASSESSMENT OF THE
IMPLICATIONS OF SUCH REPRESENTATION IN THE COLONY (PARA 3 OF YOUR TEL
UNDER REFERENCE).

DOUGLAS-HOME

DEPARTMENTAL DISTRIBUTION

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SECRET AND PERSONAL

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FEH3/301/2

(FE)

TO PRIORITY GOVERNOR HONG KONG TELMO 338 OF 28 APRIL.

FOLLOWING PERSONAL FOR GOVERNOR FPON MR ROYLE.

YOUR TELEGRAM TO PEKING NO 31: CHINESE REPRESENTATION IN HONG KONG. 1.
LESLIE PONSON HAS TOLD ME OF HIS TALK WITH YOU AND YOUR

ADVISERS AND I AM GRATEFUL FOR THE FURTHER ANALYSIS SET OUR IN

YOUR TELEGRAM UNDER REFERENCE,

2. 1 SROULD LIKE YOU TO KNOW THAT BOTH THE SECRETARY OF STATE AND ¡YSELF
FULLY SHARE YOUR VIEW OF THE POSITION THOUGH AS YOU WILL APPRECIATE VE
RUST AWAIT ACY FURTHER COMMENT FROM ADDIS BEFORE WE FORMALLY GIVE OUR
POLICY DECISION, THEREAFTER WE MUST ALL STICK FIRMLY TO THE LINE,
INCLUDING OF COURSE MYSELF IN PEKING.

3. I AM AT PRESENT EXPLORING THE POSSIBILITY OF TRAVELLING TO PEKING BY
RAF COUCT BUT THIS IS SUBJECT TO FINAL AGREEMENT HERE AND FROM
PEKING. 1. UNDERSTAND THAT YOU THINK IT GENERALLY UNDESIRABLE FOR A
MINISTER TO GO INTO CHUA VIA HONG KONG BUT WOULD YOU SEE OBJECTION TO MY
RETURHING FROM CHIHA VIA HONG KONG7 | KOULD ONLY STOP FOR A SHORT TIME
JI HONG KONG BUT I WOULD MUCH LIKE THE OPPORTUNITY TO DISCUSS MY VISIT
TO, PEKING, I SHOULD HAVE TO HOLD A PRESS CONFERENCE IN HONG KONG OF
COURSE BUT I THUK THAT THIS MIGHT BE USEFUL AND I WOULD DISCUSS IT WITH
YOU BEFORE HAND, 4. I WOULD BE GRATEFUL IF YOU WOULD LET ME KNOW IF YOU
THINK THIS I DEA NAKES SENSE.

DOUGLAS-HOME

FILES

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SIR L MONSON MR WILFORD

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which as

In your letter of 27 April, you asked how the problem of Chinese
representation in Hong Kong had arisen in its current form and what view
was at present taken of the requests made by the Chinese Government.

The case has a long history. From 1945 until the establishment of the
Chinese People's Republic in 1949 the Nationalist Government maintained
a representative in Hong Kong. lle gave the Hong Kong Government a great
deal of trouble; e.g. by claiming a position superior to that of the
Consular officers of other countries, based on the Chinese view
(Nationalist and Communist) of the unequal nature of 19th Century
treaties and hence that liong Kong belonged to Cuina.

In February 1956, the Chinese Government formally proposed the
estɛDiishment in Hong Hont of an "Orrice of d Commissioner of Forel,".
Arrkira of Che People's Republic of China, Mr. Selwyn Lloyd decidcu that
we ought not to accede to the Chinese request, but that it would be
wiser not to refuse it outright. No reply was therefore sent to the
Chinese.

+

1though the Chinese did not revert to the subjcct Formally during the
next two years, Chou In-lai mentioned it co a number of British
visitors. This led to some publicity in the British press and there were
questions in Parliament. Chou En-lai brought up the issue again with the
Parliamentary Under-Secretary at the Board of Trade (Mr. Erroll) when he
visited China in 1957. It was therefore decided that a fox! reply to the
Chinese request was necessary. In February 1958,

ir. Selwyn Lloyd told the Chinese Clergé d'Affaires that, given the
climate of our relations at the time, we could not agree to the
appointment of an official Chinese representative In Hong Kong.

The Chinese did not refer to the matter again until last year.

In March 1971. Chou En-lai brought it up during 4 conversation with our
Chargé d'Affaires. He spoke of "an CONETECTctory position' in
maintaining a Consulate on Taiwan

/while

Alt

5/5

Lord "ridges,

10 Downing Street

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4

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while refusing to allow an official "Chinese relationship wich Hong
Kong". As it appeared to us that this comment did not amount to a formal
request or proposal, it was decided that no response was called for.

The Chinese have recently mentioned the subject on two occasions. The
first was when ow Mbassador called on the Director of the West European
Department at the Foreign Ministry on 27 March. The exchange which took
place is reported in Peking telegram No. 245, of which I enclose a copy.
Addis asked Chang Wen-chin what functions it was envisaged that any
official Chinese representative in Rong, Row: would have and Ohang
underseas to pakko encui-ics. The_second_occasion was when the Chinese
Chargé d'Affaires broached the subject with a member of the Department
at á reception at the Chinese Embassy here on 7 April.

What

Our Ambassador subsequently commenced that he thought there was a case
for considering whether the Chinese responsa contained the elements of a
negotiable arrangement (Peking telegram No. 251, of which I also enclose
a copy). Governor believes that the establishment of official Chinese
Teprésentation in Hong Kong would compromise his own position cud
damage, rather than improve, velations between Chiba and Tong Kong. his
arguments are set ont in detail in Keng Kong telegram No. 31 to Peking.
Sir lec Douglas-Home agrees with the Governor.

When the Chinese define the functions they would like an official
Chinese representative in liong Kong to have, as we wust expect them to
do before long, we shall have to give careful consideration to the tenus
of our responsc.

(Sμd) P. 14. Grattan

SEORIE

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SPORDI

لالة المحامة

GOVERNMENT HOUSE

HÙNG HỒNG

5th May 1972

1.

2.

Hong Kong in the new Sino/British dialogue

Summary

We will have to negotiate with China

about the future of Hong Kong probably sometime

in the 1980's.

But we should wait till then both

to see what post-Mao/Chou China is like as a

negotiator, and also to give Hong Kong time to put

its house in order.

If both these factors are

favourable we might obtain some continuing special

status (1-5).

The present Chinese leadership seems

to wish to avoid a confrontation with us over Hong

Kong and preserve its status for the time being

because this is of advantage to China.

This

gives us a bargaining position of a sort in the

present dialogue (6-8).

3.

4.

Chinese policy in Hong Kong, and

its lack of success (9-10).

China's new international status may

make her feel entitled to a new status and gives her

The her

more liberty of action in Hong A...,

chip

1

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2.

5.

6.

7.

8.

9.

10.

China has asked for the release of

confrontation prisoners in Hong Kong and the

appointment of an official representative there (12).

Confrontation prisoners can be conceded,

but at the time of our choosing (13).

Chinese representation could precipitate

a show-down with China on Hong Kong and

consequently threaten Anglo-Chinese relations (14 & 15).

The reasons why the Chinese may have

made this proposal and their implications (16).

In view of the dangers of conceding what

is asked, the unlikelihood of the Chinese pushing

this request quickly to dangerous extremes, and the

possibility that they may not feel committed to it,

we should play it long and start with a polite

brush-off (17).

We should look for some small and safe

concession that would take account of their enhanced

status; not easy to find (18).

SECRET

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ECLIPSE

Sir.

Hong Kong, 5th May 1972

With Ambassadors exchanged and ministerial

In

visits to follow we are committed to a dialogue with

the Chinese leaders on outstanding problems.

these Hong Kong bulks large. This despatch suggests

a long term strategy, as well as short term tactics

for handling Hong Kong in this dialogue,

Inevitably

it takes one far into territory at least common

to H.M. Ambassador, Peking, and if I have in fact

trespassed in his territory, as I fear I have, I hope

he will accept my apology he knows he is welcome

in mine.

Strategy for Hong Kong

2.

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Sometime, probably in the decade of the

1980's, the shadow of the end of the lease in 1997

will force us to negotiate with the Chinese People's

Government over the future of Hong Kong. Obviously

we must be careful not to miss any opportunity to do

so that presents itself and would produce the right

result. But we can afford no false step because once

we offer to negotiate and it becomes known, confidence

in the Colony would collapse and our bargaining position

would evaporate, and I think it is in fact agreed policy

not to negotiate meanwhile because:

a) it is moSL

misese

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ECLIPSE

2.

If on these grounds our strategy

were to be to play for time e.g. about 10 or

H

15 years

envisage should be the domestic strategy for Hong

Kong. This is to tackle the domestic problems

of the Colony so vigorously during the next 10

years that they would be eliminated to a point at

which by Western standards there was nothing to

be ashamed of anywhere, and by Chinese standards

much to spur civic pride and a sense of achievement

everywhere. What has already been achieved

and planned gives an excellent point of take-off for

such a policy. In terms of programmes for housing

and urban renewal, secondary and higher education,

transport, social services, cultural development

and improvement of urban and rural environment, I

believe it could be done

it would fit in well with what I

-

always provided world

trade keeps up and Hong Kong is not shut out from

a fair share of its benefits.

4.

Such a policy is worth pursuing for

its own sake. But I believe it also holds out the

best prospect for the least unsatisfactory arrange-

ment with China on the long term future of the Colony.

Of course in certain Chinese moods nothing will

count except the urge to end completely this

colonial blot on the national honour. But we do not

know what the state of China will be in 10 or 15

years time, or who the people will be who run it,

or what their policies or priorities will be.

SECRET ECLIPSE

3.

It

They might see merit in some continuing arrangement for Hong Kong
whereby a special regime was established that nominally removed the
colonial stigma, but preserved for China some of the economic and other
material and political benefits of the present status, saved them from
having to absorb a population with such different standards of living
and attitudes of mind, and on the other hand preserved for foreigners a
tolerable trading base, some security for investment and acceptable
living

conditions while concentrating them in a single area

where they did not affect life in the rest of China. could perform the
service which Shanghai might have done

if the CPG in the early days of their power had not squeezed the
foreigners out, and it could avoid the problems the CPG experienced in
absorbing that cosmo-

politan and volatile population. I believe that the more

undeveloped and discontented Hong Kong is the less likelihood there
would be of this or a similar concept

being adopted, and conversely the more evolue the colony

the more attractive such a half-way house might appear

to the Chinese leadership, assuming it was prepared to compromise at
all. At best there may only be a 50/50

chance though these are not bad odds in human affairs

and there are other factors which might affect the

attitude of the CPG too numerous to mention. But I think

that this is the best contribution the Hong Kong

Government can make to achieving a satisfactory

settlement, and for this it would need about 10 years.

I agree.

SECKET

ACLIPSE

4.

5.

So I suggest our strategy should be

to delay definitive negotiations on Hong Kong's

future because:

a) we are not likely to get a worse answer

in 10 or 15 years time than now and we

might get a better one; and

b) Hong Kong can be developed meanwhile

up to standards that will give it a better

chance of retaining a continuing special

status in China and so preserve the British

stake, discharge our obligations to the

inhabitants, and avoid the humiliation

of an unsatisfactory withdrawal.

So much for long term strategy, and I now turn

to tactics over Hong Kong in the present dialogue.

Bargaining position on Hong Kong

6.

We

We obviously must have some bargaining

position or the colony would not still exist.

have ample evidence of instructions from Peking

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