TOP SECRET
DRAFT INTERIM REPORT:
HONG KONG
W
Paragraphs 1 and 2 as in C 165/5(67) 17
Chinese Intentions
I
3. We cannot be sure of the intentions of the Peking Government about
Hong Kong; still less do we know the intentions of the local communists
in Hong Kong or in the province of Kwangtung, which adjoins the Colony.
Nor do we know who it in control of the situation: Peking may be merely
reacting to local initiative or may possess a greater measure of control.
4. Whether Peking or the local Chinese 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
the Colony.
of her foreign exchange earnings from Hong-Kong. However, in the present
situation in China we cannot be certain that this will restrain the Chinese
from extreme action against Hong Kong. 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 from Hong Kong material advantage
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 primarily not on Peking but on the
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