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THE NATIONAL ARCHIVES

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restrictions. Further information is given in the enclosed Terms and Conditions of supply of National Archives' leaflet. Please note that this copy is supplied subject to the National Archives' terms and conditions and that your use of it may be subject to copyright

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THE NATIONAL ARCHIVES

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restrictions. Further information is given in the enclosed Terms and Conditions of supply of National Archives' leaflet. supplied subject to the National Archives' terms and conditions and that your use of it may be subject to copyright

16

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in the bhut of our becoming negotiations wolved in

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and defence L

(1)

Sir Horace Seymour's view that the usual Chinese technique is to take what they can get as a first instalment towards the attainment of their full objective. Any concession that may be offered now may, therefore, prove to be the beginning of the end of Hong Kong, ao far as we are concerned, unless we have a clear understanding with the Chinese that whatever is agreed is to be a final settlement. Whether this is possible, in view of their usual technique, seems to be open to question.

(m) The assurances respecting Hong Kong which have

been given by Ministers in the past (Annex I) and on the strength of which British firms have invested further large sums of money in Hong Kong since its liberation.

(n) The desirability of a clear understanding with

China at the outset of any discussions as to their scope, particularly if it is decided that there can be no question of the return of Hong Kong to China or the transfer of sovereignty under the above conditions. A public announcement would also be desirable in view of the effect of any uncertainty as to the future of the Colony on the necessary measures for its rehabilitation.7

(o) If it is decided that Hong Kong should not be returned to China and that there should be no transfer of sovereignty on any conditions, the question resolves itself into ene of reviewing the terms of the 99 years' lease which we have of the New Territories and which has some 50 years to run.

(p) From our point of view, the most satisfactory basis on which to negotiate in respect of the New Territories would be to undertake with the Chinese a joint review of the lease in the light of the changes which have occurred since it was first made and present-day circumstances and conditions. Any approach on these lines could be linked with the 1943 discussions. On this basis we should be able, in the course of negotiations and if necessary, to offer them their Fejective on certain conditions, which it is suggested should be those set out in Annex II.

Possible Courses

8. The factors set out in the preceding paragraph seem to point to two possible alternatives The first to transfer the sovereignty of Hong Kong to China in return for a lease, the conditions of which would offer substantially the same security and encouragement for investment and the carrying out of other measures for the rehabilitation and development of the Colony as exist at present; and the second to confine the negotiations to a review of the lease of the New

/Territories