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19. £.6. (F.1167/18/G).

12.8.46.

I spoke to Mr. LiacDougall about the letter at 19 yesterday. He urged that inter-departmental discussions on the lines suggested should be held as soon as possible. I said that in view of the need for the papers to be properly considered and the fact that Mr. Lloyd would be absent from the office in the next few weeks I did not think it would be practicable the latter half of September. kar. MacDougall is himself going to Scotland shortly but will be available from the 23rd September.

The Foreign Office have said that lir. Hall Patch or Mr. Troutbeck will take part. I think it might also be valuable to have a representative from the Board of Trade.

On our side I would venture to suggest that bir. Kahe should be invited to take part and also

a representative of the International Relations Department. If the Chinese press this matter the possibility of a question of trusteeship being raised cannot, I think, be ruled out.

I submit a draft reply to 19,

19

Авіт

10.8.46.

It is extraordinary that the Foreign Office should put forward as a basis for liscussion,

a revised edition of their memorandum, which, so far as I can see, completely ignores the strong and cogent arguments put forward by Sir Mark Young against negotiating with the Chinese on the basis or granting them concessions in respect of Hong Kong and the New Territories. It is perhaps significant that Mr. Dening does not say, in his letter, that Mr. Bevin himself wished the matter pursued. It was on that basis that the suggestion for an interdepartmental discussion was made in the Secretary of State's letter, but I do not think that we need chens raise this point with the Foreign Office before

agreeing to a discussion.

But I suggest that we should not accept the Foreign Office memorandum, as it stands, as a basis for discussion. For one thing, as already pointed out, it requires substantial amendment to take account of the arguments put forward by Sir Mark Young. For another, there is, I hope, no prospect of our agreeing with the conclusions that we should consider the restoration of Chinese sovereignty

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