CO129-558-11 Mission of Sir F. Leith-Ross to China- proposals for a Hong Kong - China customs... 29-9-1936 - 30-12-1936 — Page 24

In any further communication this subject, please quote

No.

and address-

7411/2866/10.

not to any person by name

but to-

"The Under-Secretary of State,”

Foreign Office,

London, S.W.1.

Daf.

14

24

112DEC1936

C. O. REGY

FOREIGN OFFICE.

S.W.1.

10th December, 1936.

Wired 14/12

15

вору

to

Sir,

2.

I am directed by Mr. Secretary Eden to state that

consideration has been given to the memorandum by the

Secretary of State for the Colonies P.E.J. (35)6 on the

possible desirability of a Customs Union or other special

arrangement on matters of trade between Hong Kong and China.

With regard to the disadvantages of a Customs Union

it seems that many of these would be avoided if a portion of

Hong Kong were set aside as a free port area somewhat on the

lines of the arrangement adopted at Tsingtao during the

period that that port was leased to Germany. The reservation

of such a free port area, the possibility of which is referred

to in paragraph 6 (e) of the Secretary of State's memorandum

would, it is assumed, be made a sine qua non in the event of

negotiations being undertaken with a view to the inclusion of

nong Kong within China's tariff wall.

3.

The problem of the relations between Hong Kong and

China would appear to nave two aspects: (1) the immediate economic interests of Hong Kong and (2) the desirability of

putting the relations between Hong Kong and China on a basis

which would diminish as far as possible the dangers to be

feared from Chinese irredentism. In any definite effort

that may be made to attain these objects it seems desirable

that the approach should be both cautious and gradual.

The Under-Secretary of State

Colonial Office.

Mr./