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On a priori grounds [? grp. omitted] is much to be said for (a). It is however by no means the only possibility. Many features of interview some of which I have already mentioned in paragraph
Ove, suggest (b). The statement was oral and not published. There have been no accompanying Press articles against Hong Kong or signs of a reversion to the violent Communist policy there or of other pressure grp.undec. ? against] [grp.undec. ? this] Mission (though these may come). The tone was calm much more so than would be expected if Chinese were going all out for a Macao situation. The statement referred to Chinese steps to alleviate tension and in conversation Lo admitted that Hong Kong Government had also taken some steps. Your proposals in your letter 2 September and our proposals on visas were not rejected: the Chinese noted them and said they were ready to put their views. In conversation Kao's statement on visas was confirmed though Hong Kong rider was added. The Hong Kong demands of last year were not reiterated though referred to. We were asked to reply not to accept them and reminded we could not brush Hong Kong aside. I might add more general point that detention until (a) is achieved would seem out of line with current trend in Chinese foreign policy and efforts to restore picture of correct diplomatic behaviour,
5. Vice Minister's statement therefore, although it set us well back on visas, may not be entirely retrograde on wider issue of Sino-British relations and it may be in our interests to explore the possibility of a face saving formula on Hong Kong. The Chinese may be indicating that they are willing to embark on a general discussion provided Hong Kong is included. The difficulty of course is to find a formula which does not compromise vital interests in Hong Kong and also to avoid any impression of weakness on basic issues,' which may only encourage the Chinese to ask for more. I am fully aware. that area for manoeuvre in Hong Kong is small. Acceptance of Chinese demands of last year is out of the question, They have asked us to "reply" to their demands and by this as Lo implied under questioning their meaning by actions as well as words. As regards action the most we can probably do is to try to keep the situation calm there and push on with deportations. If the Chinese Government are prepared to accept deportees this may prove to be the key to the problem. It might be possible to offer immediate release to China of a large number of deportees as a preliminary to talks. I also hope that at some point remission of sentences for. certain prisoners can be considered. I understand the Governor's problems on this but it is possible that some at least of our present staff and other British subjects, will be refused permission to leave until the majority of the Communist prisoners are deported or released.
6. On the nature of a verbal reply we should consider whether we might make a statement in Parliament or Hong Kong which reaffirmed our intention to maintain order in Hong Kong but recognised that Hong Kong's policies naturally took account of its geographical position, Chinese race of the vast majority of the inhabitants and close links via trade and other channels with the mainland. The statement could reaffirm Hong Kong's wish to maintain friendly relations with China, the fact that political freedom was enjoyed
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