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DRAFT INTERIM REPORT: HONG KONG
In discussion on the situation in Hong Kong Ministers decided (OPD (67) 20th Meeting) that, since we could not rely on remaining in Hong Kong on present terms until the lease of the New Territories lapses in 1997, officials should consider our policy in respect of Hong Kong in the long term, what adaptations of the status of the territory might be possible and desir- able after the conclusion of the present conflict in Vietnam and also what steps would be necessary if we were forced to evacuate the Colony.
2. We are preparing a wide-ranging study of the position and long term prospects in Hong Kong as the basis for consideration of future policy. But it is very necessary to give urgent consideration to our position if the situation should deteriorate suddenly in the near future. Accordingly we have prepared first an interim report on the prospects for withdrawal from Hong Kong if it were suddenly forced upon us.
Chinese Intentions
3. We cannot be sure of the intentions of either the Peking Government or
the local communists in Hong Kong. Nor do we know who, if anyone, is in direct control of the campaign in Hong Kong or in the province of Kwangtung which adjoins the Colony. Peking seems to be largely reacting to local
initiatives.
4.
Whether Peking or the local communists are in control, some clear conclusions can, nevertheless, be drawn. China derives great material advantages from Hong Kong: in particular, she obtains some 40 per cent of her foreign exchange earnings from the Colony. However, in the present situation in China we cannot be certain that this will restrain the Chinese
from extreme action. For historical reasons they have a strong wish to humiliate us and clearly their ends would be best served if they could do this while still obtaining material advantage from Hong Kong.
5. It seems likely therefore that Peking will continue to encourage the local communists to persist in their present campaign against the Hong Kong Government and to use increasingly violent methods. At the same time, providing the Hong Kong Government maintains its authority, it is unlikely that Peking will directly intervene by e.g. sending its armed forces across the frontier. However, if the Hong Kong Government loses control, Peking may then intervene to restore order and protect its "subjects". The outcome of the present crisis will therefore depend immediately not on Peking but on the determination of the local communists to continue their campaign and the success of the Hong Kong Government in maintaining its authority.
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