CO537-2192 — Page 18

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5. Mr. Seel and I discussed the F.0. letter at No.25 with Sir A. Grantham at the end of last week. Sir A. Grantham considered the F.0. advice to be generally sound in all the circumstances, and it was agreed that a despatch should be drafted on the basis of that advice. I accordingly submit a draft opposite for consideration. I have suggested in the final paragraph of the draft that we should say to Sir A. Grantham that he should not feel precluded from raising the whole question again should he feel obliged to do so after having studied conditions in Hong Kong. The advantage of including this passage in the despatch would, in my view, be in some sense to reserve our position vis-a-vis the Foreign Office who, I feel, with all respect, are prone to subordinate too readily Hong Kong's interests to those of our general relations with China.

6. If the draft is agreed in the Office,

I would propose to clear it with the Foreign Office before it issues.

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