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New Territories could almost be regarded as a substitute for an explicit declaration of policy that we intend to remain in Hong Kong, and do not intend prematurely to give up the lease of the New Territories.

There is, however, it seems to me a difference between the two projects, Even in these days, I suppose, an airport could be regarded as a luxury by comparison with an adequate water supply for a teeming population. Constructing an airport in the New Territories might not therefore create conditions which might make it necessary for us to clear out of Hong Kong Island whereas unfriendly control or the water supplies of the Island might well make our position untenable. The degree of this risk would of course depend on the extent of the facilities for water supply existing on the Island itself.

There are also other papers on which the position of Hong Kong in relation to the possible passing of the New Territories under Chinese control has been discussed. In 1944 (I think) at a time when it appeared possible that we should be faced with a strong Chinese Government determined to pursue the question of the premature termination of the lease of the New Territories, we produced a paper (for the F.. (0) Committee) in which a

possible policy in the face of such a threat was discussed;

and one of the elements in that discussion was the dependence of the Island on water supplies from the New Territories. This paper was prepared on one of the old pink series of files which (in the Downing Street days) were kept in M.S. 25. My recollection is that copies of that paper were sent to Mala ya and Hong Kong either just before or just after the restoration of Civil Government.

Whether it arose out of that paper or not, I cannot now recollect, but there was correspondence with Sir Mark Young, which included a despatch from him in which our minimum political-strategic requirements in the New Territories were discussed.

I have no doubt that that discussion included

references to the water supply situation. I understand tha that correspondence probably took place on the "Future of Hong Kong file.

This question of development in the New Territories ha.. also been raised recently in connection with mining policy, on which we have I think recently written to the Governor.

It is difficult, without some study of the discussions which have already taken place, to form an opinion whether we ought to embark upon a more general consideration of development policy in the New Territories in relation to its political implications. I am inclined to think that it will be sufficient to deal with each case as it arises. Nevertheless, since so much of these discussions took place before those of us who are now concerned with the affairs of Hong Kong were dealing

with those matters, it might well be userul for a

note of all these discussions to be prepared so that

it would be available, as a background, to any

future discussion on particular projects of develo ment.

2.ix.48.

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