TOP SECRET
DEPARTMENT OF ECONOMIC AFFAIRS
Storey's Gate, LONDON S.W.I
Telex: 263554 Telephone: TRAfalgar 7848, ext.
36
ur reference: our reference:
Dear Arthur,
HONG KONG
19th July, 1967
Reflecting on my position in last Monday's meeting as a minority of one, I have thought that I must make bold to get some of my thinking down on paper.
This is because I am still not altogether happy with the way in which it seems that the interim report is likely to emerge.
2. I think that the Working Party is taking the existing analogies too literally. Everybody knows that Hong Kong is quite like anywhere else in the world - and this includes Macao, Shanghai and Peking. The analogies are of course necessary evidence, but they are not the whole story. There are three particular aspects, I think, in which our position in Hong Kong differs markedly from the three places I have mentioned above:-
(i) We hold very large assets the sterling balances
(ii)
(iii)
which one must regard as being in some sense the property of Hong Kong and in ideal circumstances to be made available to the Hong Kong authorities whoever they may be. Even if one excludes depositors in the Hong Kong and Shanghai Bank who might be able to receive their dues outside Hong Kong, the assets are still a very large sum. It ought to be possible to make some sort of bargaining use of these assets.
It is generally believed that the trading position in Hong Kong is at least as valuable to the Chinese regime as to ourselves. It should be possible to make use of this fact in reaching some sort of arrangement. It is moreover to our own economic advantage to try to preserve as much of the trading facilities of Hong Kong as possible rather than to abandon them in chaos.
We have leases on the main part of the territory of Hong Kong which expire in 1997, and it has, I think, been generally accepted that we could not hang on to the ceded territories beyond that date; the early surrender of leases and ceded territories ought to be a bargaining factor.
3. Now it will be said, with a great deal of validity, that these factors cannot be deployed in circumstances of passion such as we might be facing in the near future. Nevertheless, I do not yet find myself convinced that it would be more profitable to us to indulge in a hasty and chaotic withdrawal (broadly on the grounds that a Macao type solution is quite unacceptable) than to make the best
than to make the best (admittedly a very poor best) of a very bad job by doing our utmost in most unpalatable circumstances to salvage what we could of lives, trade, relations with China over a generation or two, and something which
Sir Arthur Galsworthy, K.C.M. G.,
Commonwealth Office,
S.W.1.
/seems
TOP SECRET
No comments yet.
Private notes are available after approval.