SECRET
5.
(ii)
China has decided to try to force us to accept
a Macao position in Hong Kong. If this is so, she
will continue to escalate Hong Kong disturbances to the
point when, in order to remain in Hong Kong, we must
capitulate to whatever demands are made, and, in effect,
accept Chinese domination of Hong Kong.
(iii) China has decided to sacrifice the economic
benefits she derives from Hong Kong to Cultural
Revolution "purity" of doctrine, and to drive us out
of Hong Kong completely.
We cannot resist a determined attempt to force us out
altogether and we could not tolerate the humiliation of
remaining in Hong Kong without effective control. But there
is no need to assume the worst and our immediate responsibility
is to maintain law and order, retain morale and confidence so
that the economy can continue to flourish. Firm action is
required to do this but, at the same time we should avoid,
as far as possible, action which could be regarded by the
C.P.G. as provocative. We should avoid doing anything to
"escalate the confrontation" to the extent that we get
involved in a situation from which there is no escape except
by abject surrender or a futile attempt to fight it out,
leading to the same result. Our steps, therefore, must be
directed to the needs of the local security situation while
taking the wider implications into account, and they need
to be carefully measured and timed.
SECRET
/6.
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