CO537-1656 — Page 11

(b) At the time of its cession in 1842 Hong Kong

was a desolate island with no inhabitants except a few fishermen. British enterprise, law and security have built it up to be one of the great sea ports of the world, with a population of nearly one million inhabitants. A relaxation of direct British control over the whole or part of the Colony would be likely to diminish the value of Hong Kong as a free port and trading centre for the commerce of all nations. Apart from its entrepot trade, Hong Kong provides at present the only modern shipbuilding and repair facilities between Singapore and Japan.

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With the removal of the protection afforded by extra-territoriality and the probability

of unsettled conditions in China for some years to come, Hong Kong is likely to acquire increasing importance and value as a base from which British and other merchanta and industrialists can operate in and with China. In this connection the Dominions may be expected to have a substantial interest as it seems probable that Australia and New Zealand at any rate may wish to increase their trade contacts with China. The nationals of other countries can equally find in Hong Kong the most secure and convenient centre from which they will be able to conduct their trade. Consequently it can be regarded as a matter of international concern that Great Britain should not consider weakening her position in Hong Kong

(d) There is no evidence that the Chinese in

Hong Kong itself, many of whom are British subjects, (or indeed those in China except in political circles) have any wish to see the end of British Administration in Hong Kong.

Amendment to Para 9(e) proposed by the Joint Planning Staff of the Chiefs of Staff.

"Strategically Hong Kong is likely to be useful as an advanced base although it could not be defended against a major power. We cannot yet ssy whether new developments in methods of warfare will increase or decrease Hong Kong's strategic importance."

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as a naval pase by the U.S.S.R. She is therefore not in a position to claim that the existence of special British rights in Hong Kong is without parallel in the Far East,

On the other hand a hostile Chinese Government could probably make life impossible for us in Hong Kong, even if it was not in possession of the New Territories: this is indicated by the strike and boycott of 1925/6 which virtually paralysed the trade of the port. It is also arguable that as Hong Kong is geographically, economically and ethnically part of China it would be possible to make limited concessions in this instance without very great loss of "face" and without encouraging further Chinese agitation in other areas such as Malaya.

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