CONFIDENTIAL
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Mr. W. S. Carter
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M.
m. J. Muny
Jan.
As you know, Mr. Anthony Royle, MP, is visiting Hong Kong later this month. He called on Lord Shepherd this afternoon to discuss the present situation in the colony. It is not necessary for me to record the conversation in detail, but there are two points which I should, perhaps, mention:-
(1) Hong Kong Tunnel
Mr. Royle asked Lord Shepherd whether he was aware of recent negotiations with the French about the proposed Hong Kong tunnel. When Lord Shepherd said "No".
Mr. Royle disclosed, on a strictly confidential basis, that he had heard that C.O.F.A.C.E., the French equivalent of our E.C.G.D., have agreed to finance the construction of the proposed tunnel provided the project is undertaken by French contractors. He understands that a sum of 36 million dollars is involved, repayable over
six years at 8 per cent interest and that the negotiations are due to be completed on Saturday, 11 January.
(ii) Mr. Grey
Mr. Royle said that on previous visits to Hong Kong he had sometimes taken the opportunity to go over to Macao to lunch with Ho Yin, one of the leading Communists there. He had found this contact particularly valuable. On his last visit (when he was accompanied by Q. W. Lee from Hong Kong) he had been given very accurate information by Ho Yin on the Communist intentions in Hong Kong. He wondered whether Lord Shepherd thought a similar visit to Macao to see Ho Yin at this stage would serve any useful purpose.
Lord Shepherd said that in his view there would be some value in such a meeting since it would give Mr. Royle the opportunity to probe Chinese intentions regarding Mr. Grey.
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