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76.
for economic reasons, to take Hong Kong over with
minimum damage to its economy.
(b) The strength/weakness of our position. In this
respect we would be in the best position if we
sought to withdraw voluntarily when conditions were
more or less normal (when, of course, public opinion
in the U.K. and Hong Kong would find it most
difficult to accept the need for our action); in
a less satisfactory position if we tried when
conditions in Hong Kong were difficult (e.g. because
of economic decline); and in the worst possible
position if we did so under Chinese pressure.
The weakness of our position is that we would have many
hostages in Hong Kong in terms of people and assets, a
substantial proportion of which we should find it very
difficult (if not impossible) to move. We ourselves have
no means of bringing substantial pressure to bear on China.
Our trade with her is not significant; our exports are
neither vital nor irreplaceable from other sources. Our
military capability (including nuclear capability) could
hardly be a factor in a situation in which we were trying
to get China to the conference table particularly since
my
China's assessment is probably that we would not use it
even in defence of Hong Kong against a military take-over.
77. The strength of our position lies in the economic value
of Hong Kong to China as a source of foreign exchange. Our
strongest card would be the possibility of handing over a
buoyant Hong Kong economy for which we could hold out
prospects that it would continue to earn foreign exchange
in Chinese hands. Our ability to play this card postulates
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