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In the light of the serious situation dislosed in the previous
paragraph we have considered whether there is any alternative
course by which we could negotiate with China some modification
of our control of Hong Kong on the understanding that we should
carry out an orderly withdrawal over a period of some months.
Viewed objectively, there is some reason why the Chinese should
agree to a negotiated withdrawal of this kind: in addition to the
trading advantages which they derive from Hong Kong, we hold
substantial sterling balances, control of which would clearly be
advantageous to China. We do not rule out the possibility of such
a negotiation at a later stage, if the Cultural Revolution comes to an
end and the attitude of the Chinese Government towards Hong Kong
becomes more rational; and in the longer term study of
Hong Kong which we shall now carry out, we will consider in more
detail that possible situation. It is, however, questionable whether
in the present situation in which the Chinese attitude towards
Hong Kong is not governed by rational considerations any basis
for a negotiated withdrawal exists. In favour of attempting such a
negotiation even in present circumstances it can be argued that
at least nothing would be lost and something might be gained: the
Chinese might accept, even in their present mood, that if the
agreed to let us withdraw in an orderly fashion, lives would be
spared and they would achieve advantages after we had gone
e. g. the sterling assets
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of which they would not otherwise achieve.
But the majority view is that in the present situation an attempt
to negotiate with the Chinese for an orderly withdrawal would
not be practicable; if the Chinese are not prepared to accept a
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