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Chinese Interests
.(e)
(f)
Hong Kong provides China with easy access to the free world
for trade, travel and subversive activities. In our hands it is of considerable economic value to China, accounting for about a third of its total foreign exchange earnings; but, as China's economy develops, that value could diminish. There is evidence that these economic considerations are still regarded as paramount by the more moderate pragmatic elements who are now extending their influence in the Chinese leadership; but there is always the danger that extremist clements may gain the ascendancy, who would be prepared to sacrifice the economic benefits for doctrinal purity. Chinese Attitude and Intentions
(g)
(h)
(i)
The Chinese Government regards the whole of Hong Kong (both ceded and leased areas) as Chinese territory to be recovered (although they are on record as saying that they will negotiate its return); and even if they allowed the lease of the New Territories to run its full term, we could not expect to re-negotiate it in 1997.
Their
At the moment they are prepared to accept the continuing existence of the Colony because it brings them economic and political advantages. The campaign of violence has been abandoned and they apparently recognise that a Macao-type situation cannot for the present be achieved.
immediate aims are to maximise their commercial interests
in the Colony and to concentrate on broadening the base of their support among the people. In certain circumstances,
howeve 9
this policy might quickly change for one of reducing the Colony to a position of subservience or even of taking
it over.
It is unlikely that the Chinese would take Hong Kong by direct military attack; it would be more in keeping with their theory of indigenous revolution to create, by local action, a breakdown of authority in the Colony.
American Involvement
.(j)
(k)
The Americans make great use of Hong Kong and would wish us to stay.
Fear of American retaliation (which we might foster) may inhibit the Chinese from taking any action that could be clearly defined as "Chinese aggression".
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/Withdrawal
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