CO129-571-16 New Territories 13-4-1938 - 12-12-1938 — Page 56

longer range of the New Territories it

would be reasonable to have in mind the

possibility of Hong Kong making a contribution

in some form. It would depend on the

circumstances of the deal in prospect. We

cannot begin to form a view in present

conditions whether such a deal would be

1

likely to be a matter of a simple cash payment.

If I were to prophesy, I should say that it

would be very unlikely, and that Chinese

sentiment will be so opposed to further

alienation of Chinese territory, that even a

proposal for a lengthened lease of the New

Territories will not be negotiated on any cash

basis, but only as part of a wide political deal,

possibly also embracing the Treaty Ports.

4. On the question of principle to which you

refer at the end of your second paragraph, we

should not like to join you in the opinion

that a payment to China for the New Territories

would be chargeable to Hong Kong funds. The

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