Hong Kong's credit in the City is certainly not so good as that of other Colonies. The uncertainty is also affecting the Colony in another way.. The Chinese population are, naturally enough, continually looking over their shoulders at Nanking, and the Kuomintang, which was able to establish itself quite firmly in the Colony on the surrender of the Japanese and has since reinforced its position, is thus able to increase its influence over the Chinese population by reason of all this uncertainty, This has recently been made very clear by the reluctance of the population to assist in shaping the new Constitution.
It is in these circumstances that I feel the interests of the Colony and its inhabitants require some clearing of these apprehensions. If the Administration is to proceed with rehabilitation and development, it is essential that a reassuring statement should be made as soon as practicable.
The other matter which is dealt with in the paper, namely, the line we should take in the event of discussions with the Chinese on the New Territories, is of some urgency because until we have made up our minds whether or not we are going to make continued control over installations in the New Territories one of the essential conditions to any premature termination of the lease, we cannot very well take a decision as to whether the new airport, which is so urgently required, should be constructed in the New Territories, or in the ceded portion of the Colony. The difference in estimated cost is £4,000,000 in the New Territories as compared with over £10,000,000 in the ceded portion of the Colony, where the airport would take over twice as long to construct. Furthermore, the site in the ceded area has not yet been examined by the technical experts.
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