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Do
COLONIAL
OFFICE
CHINESE INTENTIONS TOWARDS HONG KONG
The Chinese Government regard Hong Kong and the New Territories as part of China. This has been repeated in several official statements during the past few months. It is doubtful whether they see any difference in the position of the ceded areas of Hong Kong and the leased area of the New Territories. The Chinese regard the treaties by which both these arrangements were mado as "unoqual", as having been forced upon China at a time of national weakness and hence no longer valid.
2. The Chinese Government have nevertheless been prepared to tolerate the existence of Hong Kong ever since they came to power in 1949. For the reasons outlined in paragraph 9 of Part C above, We cannot be certain to what extent the Chinese have now altored their policy of tolerating the status quo. It seems likely that the Chineso have made no fundamental new policy decisions over Hong Kong but aro merely taking ad hoc decisions as tho situation develops. But the cumulative offect of a series of such decisions has been to croato a policy of hostility towards the Hong Kong Government which it would take some time to reverse oven if the present crisis came to an end. While China remains in turmoil, and while the Cultural Revolution campaign continues, it is unlikely that this policy of hostility will altor.
3. Tho Chinese Government's present maximum ains are apparently to bring about a Macao-type situation in Hong Kong in which the British would remain nominally in control but in practice be dependent on Chinese approval for all important decisions. Thore are no indications so far in Chinese propaganda, or in what we know of secret instructions, that the Chinese wish to expel us from Hong Kong at this stago.
4. Tho Chinoso have so far failed to achieve their presumed objective of a Macao-type situation. Assuming that they continue their present hostilo policy, the two methods open to them are either to persevere with the game tactics and try by intensified terrorism and disruption to undermine the control of the security forces and tho administration until they are forced to make a public gesture of surrender; or to change their policy and take over the Colony by military force. The Chinese havo sufficient troops within easy reach of Hong Kong to do the latter without much difficulty. The reasons why the Chinose are unlikely to resort to military force are probably threofold: they would prefer to see Hong Kong remain in British hands for the time hoing so as to continue to receive economic benofit from it; they are afraid to risk nuclear retaliation by the United States or oven the United Kingdon which they might think would follow a direct military
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