CO537-2187 — Page 142

importance, that, if and when the Chinese seek the

discussions contemplated in 1943, it should be made

a condition prior to the opening of discussions that

they will be confined to the lease of the New Territories.

It would also be useful if an understanding were reached

with the Chinese before the discussions that, if agreement

were reached as the result of the discussions[in regard

eto the New Territories, this would be regarded as a final

settlement of the so-called Hong Kong question.

#

.

15. The following appear to be the factors to be

taken into consideration in formulating the line to be

taken, if and when discussions take place with the Chinese.

(a) Chinese goodwill and co-operation are necessary

for the re-establishment of our position in

China, in the Far East generally, and in Malaya

in particular, whereas China has no essential

need in which she is dependent on us.

(b) Geographically, China is in a position at short

notice to paralyse the entrepot trade of Hong

Kong, on which the Colony depends. It is a

matter of opinion whether the present Chinese

Government could effectively organise and carry

out such a movement. weds in politi

(c) The possible need for facilities in the New

Territories for the construction of new

nt found projects (e.g. the airfield project estimated

to cost £4,000,000).-

00

(d)

J

The need for continued control over installations

already constructed in the New Territories on

the termination of the lease, e.g.water supply.

(e): The administrative and other difficulties that

would follow the return to China of the built-up

area of Kowloon which is at present included in

the New Territories.

(f)

The absence of any good reason why we should

agree to the premature termination of the lease

without any quid pro quo.

/16. I