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The Chinese response to our offer of negotiations would depend very much on whether it suited their policy and interests at the time to take the Colony over and, of course,
The chances on the strength of our negotiating position. of a favourable response would be best if the Chinese were genuinely anxious, for economic reasons, to take Hong Kong over with minimum damage to the economy; our negotiating position would be strongest if we sought to withdraw when the Hong Kong economy was its normal buoyant self and there was
no Chinese pressure.
Our negotiating position is, however, weak in that we have many hostages in the Colony in terms of people and assets and no means of bringing significant pressure to bear on China. The strength of our position will rest on Hong Kong's economic value to China and on our ability to hand it over with that value unimpaired and its trading links with Western countries kept open. To use this card changed attitudes on the part of some Western countries will be a prerequisite.
The initiative does not effectively lie in our hands: the Chinese could always frustrate our attempts to negotiate. But on the timing of an approach all the considerations indicate that we should make it as soon as there emerges in China a regime with which we might do business and before the Hong Kong economy starts to run down in the 1980s; we should avoid any time when the Hong Kong economy is showing weakness or we are under Chinese pressure.
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