CO129-571-16 New Territories 13-4-1938 - 12-12-1938 — Page 5

of the New Territories. I incline to agree with

Mr Rogers. It might be that the Chinese Government

might be willing to give some assurances in the

matter under pressure, but to exert that pressure

just now might savour of blackmail. I cannot

imagine the Cabinet thinking this a favourable

moment to attempt to buy rights in the Territories,

except on the possible grounds that they might be got

one

cheap. We advantage in acquiring an extension

of the lease at this early date would be that any

such concession could be asserted against any

future government of South West China, in the event

of the break-up of China into fractional States.

But if the Japanese succeed in establishing a

puppet government in South West China, I doubt if

Hong Kong itself would be tenable, with or without

the New Territories.

On the whole I think that the conditions

are too speculative to justify any consideration

of the renewal of the lease at this date.

I think that we had better ask for F.0.

views on Sir G.Northcote's contentions without

endorsing them in any way.

# Plowell

30.4.38

Jtlalder

304.38

I entirely agree that the present is a most inopportune moment for raising Auquestion, Apart from the political issues, bure is the point that are hope as time goes on to encourage more amore Chinese-controlled enter.

•prise in this area which we

for preference reasons will want to be in the Empire knot in China. I'ne more we can create such vested interests the stronger the support we shallget viten Chine for an

the status ens. I

extension

of