In his present letter, Sir G.

Northcote emphasises the risk of our

"missing the market". But the present state

of the "market" is precisely one of the

difficulties in the way of going ahead with

the proposal, and the most recent information

is indeed that China is showing signs of

cracking under the Japanese assaults; and if

that is confirmed, the moment has passed, if

indeed it ever existed, for us to fish for

advantages in the New Territories in the

present troubled waters in China.

It seems to me that Chinese "face",

whether in victory or defeat, would require

the basis of any extension of our rights in

the New Territories to depend upon the return

to China itself of her formal sovereignty of

that area either on the expiration of the

present lease or, and preferably, at a

substantially earlier date.

the

The defence aspect, although not

&conomic on, of the case for Hoarding the N. Temitonier is road to Hong Kong

have become less stong

may

result of

16,9:884,

as h

the recent decision of

The C.I.). That the defence forces

in the Colony

an encry

the island

on being pressed by

should withdraw to

and evacuate the

N. Temtorice & Kowloon.

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изнан

I suggest a diff nytom reply.

16.8.

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