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that the question of jurisdiction would not arise. I think therefore there is much to be said for handing it all over to the Chinese Government for their Representative in Hong Kong. I doubt whether it is any use trying to insist upon a lease. The Chinese are hardly likely to agree, Aurely an international Agreement should suffice? It looks to me as if the Governor does not appreciate that a compromise involves giving away something and not insisting to the full on ones own point of view. A lease would clearly imply recognition of their own claim. An agreement would not mean that we abandon it or concede that the Chinese are in the right.

I agree that the first step should be to have a discussion with the Foreign Office.

Jea

28. 6. 48.

We clearly cannot do otherwise, I think, than accept the view expressed by the Law Officers in No. 10 on 54145/16/6/48 below. I should certainly send a copy of the to the Ministry of Defence, and the best way of dealing with the matter now seems to me to be to have a joint meeting both with the Ministry of Defence and the Foreign Office with a view to giving the Governor a summary of the advice tendered by the Law Officers, and pressing him, despite the views expressed in his telegram at No. 253, to reconsider the latest Chinese proposal or to propound an alternative compromise if he wishes to do so. He must realise, however, I think, that a com- promise, with all it involves, will be necessary if we are to reach any solution in this matter. Will you, therefore, be prepared to preside over a meeting, which ought to be arranged as soon as possible? In proposing it to the Ministry of Defence we should, I think, send them a copy of the Governor's telegram and inform them of the Law Officers' opinion.

w, Mr. Roberts-ray should also

be asked to come to the meeting as the Foreign Office will, no doubt, bring their Legal Adviser.

29.6.1948.

I agree that an interdepartmental meeting (C.0., F.0. and Ministry of Defence) would be the most practical means of reviewing the situation. The purpose of the meeting would be to attempt to arrive at an agreed course of action to be recommended to our respective Ministers.

But, in preparation for this meeting it is essential that we should have a note setting out, in chronological order and tabular form, the various proposals which have been canvassed in the past, what objections have been raised to each of those proposals and by whom.

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