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as set out in K(69)1 are all so grisly that almost any alternative is preferable.
5. In order to save face (or whatever other expression may be more suitable) the Chinese will have to get something (other than $600 million annually) to justify their decision to prolong the British stay in Hong Kong. I suggest first that we (or the Hong Kong Government) might have to pay for the New Territories lease (I accept that without the New Territories Hong Kong is not viable). Depending upon the Chinese attitude we might be asked to pay a token, a moderate or an exorbitant rent for the New Territories. Next there is the possibility that the Chinese might demand retrocession of Hong Kong Island and other parts of Hong Kong which we maintain are ours. We might get an agreement for a peppercorn rent in exchange for title which the Chinese could claim as an important victory, or the rent might follow those for the New Territories in being moderate or exorbitant. But in either case we must remember that the Hong Kong Government is more likely to be willing to pay even quite a large rent as "Danegeld" than they are to pay H.M.G. for a token defence effort which they know cannot protect them.
6.
Following from the above analysis I submit that Ministers ought to be asked three questions:
7.
(a) Are they prepared for Britain to remain a colonial
power if this is what the Chinese appear to want?
(b)
Would they be prepared to negotiate on the basis of the possibilities outlined in paragraph 5 above including the idea of retrocession to avoid an ignominious withdrawal?
(c) Do they agree that such a negotiation should be
started as soon as a reasonable and willing Government comes to power in China, possibly as early as the mid- 70s?
I have two further comments on the paper K(69)1. It seems to me to assume too easily that Hong Kong in Chinese hands would remain an economic power house and goes on to discuss whether Hong Kong would still be able to sell its products. I doubt whether there would be the products to sell and even if there were, unless China has entered world markets as a member of GATT etc. the products of China (Hong Kong) would never receive the favourable treatment they now get. Inevitably too lack of foreign investment would soon reduce Hong Kong to the level of Shanghai today.
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18.
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