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would too be in a strong position since the Americans are not likely to be much interested in this question. I suspect from 77, however, that with their new general clause they may have overreached themselves

with the State Department.

It is, of course, a question of much greater importance even than the holding of the New Territories which is at stake. I have flagged in the memorandum in 55104/42, which has already been circulated to Ministers, the passage dealing with these leased territories. In general the situation is that the leased territories have become an essential part of the territory of Hong Kong as held by us before the Japanese attack, since (a) the port and Colony depend for important utilities such as water supply and civil airfields for these territories; (b) the extension of the Chinese tariff barrier into the heart of the new development in Kowloon may be expected to seriously diminish the economic importance of the port. The Chinese are probably well aware of these considerations, and by raising the point now are staking out their claim for the ultimate rendition of the Colony as a whole to their sovereignty.

and

The question of the future of British territories in the Far East has already been discussed with Ministers, but no agreement has been reached so far. The alternatives at the moment appear to be

(1) To turn the Chinese demand down bluntly;

(2) to reply on the lines which the Americans have suggested in 77 to the more general proposals put to them; or

(3) to inform the Chinese on the lines suggested in paragraph 23 of the memorandum on the file referred to above, i.e. to declare to them that we would be ready to consider with them the future position in Hong Kong, and would not for our part regard the maintenance of British sovereignty over the Colony as a matter beyond the scope of such discussion. Tactically at the moment (2) would seem the better course since it will to some extent force the Americans to come along with us. But the matter will presumably require reference to Ministers.

Лови протом.

17.11.42.

I don't think that (2) gins

7

a

line

·

The relinquishment

our exher. Hemtonal rights in

China

9

matters intimately

connected in th that issue

cannot

be held normally to extend to the relingwishment of Buksh Fenton (to that is what the

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