D. Relations with China
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Hong Kong's relations with China have been remarkably stable in the last seven or eight years. An important factor in this relationship is the Colony's great economic value to China, which receives very frequent public mention both in the U.K. and Hong Kong.
2. The major bone of contention in the last two years has been the use of Hong Kong by American forces, particularly forces from Vietnam. This has led to Chinese allegations that Hong Kong is an American base. If this matter is raised, the S. of S. is advised to confine his romarks to a state- ment of our position namely that there are no U.S. military installations in Hong Kong; that no warlike facilities are provided; and that Americans
continue to send their forces to the Colony solely for "rest and recreation" purposes as they did before the Vietnam war developed.
3.
Questions on the relationship with China lead naturally and inevitably to the question of the future of Hong Kong. This is a matter on which we carefully avoid any official pronouncements, and on which views should be expressed in discussion with the Governor and officials only. On the one hand, to refer to the Colony's future in terms that imply its continuing existence after 1997 or an eventual status for it other than reincorporation
with China is likely to be regarded as provocative by the Chinese. To infer openly that Hong Kong must one day cease to be British territory and must inevitably be returned to China would produce a catastrophic loss of confidence, within and without the Colony, which would probably ruin it economically and hasten the date of its return. There is from time to time well-informed
speculation on this subject in the local Press. But ministerially and officially we stick our heads in the sand and ignore the problem, like most people in Hong Kong. It is in any case an unprofitable subject for study
at the present time.
4. If the S. of S. is asked for his views on the present situation in China he might say that the information coming out of China is fragmentary and confusing, and it is not possible to form any definite conclusions on what precisely is happening there. In any discussion with the Governor about the changing scene in China it might help to focus the discussion if the S. of S. were to advance the view that Hong Kong might have more to fear from disintegra- tion and chaos in China than from any change of settled policy on the part of
a strong central administration. In the first situation the mass movement of refugees and border incidents inspired by irresponsible local authorities might present serious dangers; whereas a strong central administration is likely to continue to pursue its essentially pragmatic approach of not doing anything calculated to impair the economic usefulness of Hong Kong to China.
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