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Cypher/Cat A
EDIATE HONG KONG TO COMMONWEALTH OFFICE
Telno 331
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15 March 1968
Addressed to Commonwealth Office telegram No. 331 of 15 March. Repeated for information to Peking and POLAD Singapore.
My immediately preceding telegram.
K.C. Jay, who is former Manager of the Bank of China now handling its exchange broking business told us on 7 March that the present Manager of the Bank, Li Choh-chih, had asked him, allegedly on the instructions of Chou En-lai, for an opinion of the financial and economic outlook for Hong Kong and also on how the CPG could best reach a satisfactory political solution to the Hong Kong question.
2. On 10 March Li took the unusual step of calling at Jay's house. According to Jay, he said that in the meetings which had been taking place in Peking in February and March he had met Chou En-lai who had said that the present wish of the CPG was to settle the Hong Kong question to their best advantage. They recognised that it was impossible to hope for a Macau-type victory in Hong Kong. This was not now their aim. Instead they wished to bring the troubles to an end. To continue the struggle was moreover to play into the hands of the Russians.
3. Li went on to say that there were difficulties however. There were many advocates of continuing the struggle and their voice was listened to particularly in Canton. Under a system of "extensive democracy" it was impossible for the Authorities in Peking to ignore the feeling of people in Canton completely. Again, it was hard for Peking to control would-be trouble-makers in Hong Kong. The Unions in particular were not amenable to guidance, though China could do its best to end the troubles by precept and advice. Li said that no-one sufficiently realised the difficulties of trying to control local activists who used the tactic of quoting from the works of Mao to support their stand.
4. Li said that in seeking a solution for these difficulties Chou thought that it would be useful to get the opinion of one or two men' of goodwill in Hong Kong who really knew the situation there and use them to sound out the Hong Kong Government about a settlement. Various names had been suggested and the eventual choice fell on Jay. The idea was that he should be invited to approach the Hong Kong Government direct, but to talk only to a senior responsible official or, if that was not possible, then to the Chairman of the Hong Kong and Shanghai Bank. The basis for the discussions would be the previous Chinese Government "demands" but the majority of these would be insisted on in a token fashion only. Chou had reportedly added that there was nothing that could not be solved by negotiation; the most difficult problem was
likely to be the release of the political prisoners..
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