CO129-571-16 New Territories 13-4-1938 - 12-12-1938 — Page 14

Chinese Government will develop.

Paras. 6 and 7. The arguments in these paragraphs

seem to envisage the continued inefficiency of the

Chinese Government.

Para.9. The wireless telegraph issue is important,

and here again it is by no means certain that a suitable

arrangement would not be made with the Chinese Govt.

Para.12. These reasons do not seem to me in any

way essential to the maintenance of British control.

With regard to the argument in Mr. Clauson's

minute of 30.4. that vested Chinese interests in Hong

Kong will support the maintenance of British control of

the leased territories, I suggest that the present

development of Chinese nationalism would seem to show

that those vested interests would carry little weight

in the face of popular opinion.

There remains the issue of defence, which

must clearly be considered by the O.D.C. From this

point of view it is no doubt essential that H.M.G. shoub

retain the main part of the leased territories. The

question is whether British interests demand the

maintenance of Hong Kong as an outpost of British naval

power.

Finally, I suggest that this matter raises th question of

the whole future of Hong Kong in relation

to British interests in the Far East, and that in tne

present state of uncertainty we are in no position to

determine what those interests will be. If the present

conflict should end with Japan in substantive control

of China, our position in Hong Kong would probably be

untenable. If on the other hand China should eventually

emerge as a fully conscious and powerful nation state,

whether in full control of South China only or of the

whole of China, it is again possible that British

interests