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Nor would Hong Kong continue to have access to the markets of the world. as it has-today, Hong Kong would probably sink to the level
of Shanghai and for the same reasons. (c) Hong Kong's tourist and entrepot earnings
would quickly dry up. and no longer-be-a souroe-of-income-to the Government. (a) China is still a very backward country
agriculturally, economically and industrially.
Even under less doctrinaire leadership than it has at present, it will take a very long time to achieve even modest economic success. All these factors rationally militate against the Chinese Government taking voluntarily a decision to regain control of the Colony until they no longer need the foreign exchange benefit of it. Nevertheless irrational actions by the Chinese Government could precipitate the fall of Hong Kong and a major disaster or humiliation for
Britain.
7. If, however, the arguments in the preceding paragraph are as apparent to the Chinese Govern- ment as they are to us they may prefer to see Hong Kong remain under our Administration and
thus to continue to enjoy the fruits of its colo- nial status while seeking to reduce the degree of control we have to that enjoyed by the Portuguese Administration in Macao at the height of the Cultural Revolution. This is a situation which we should of course resist, as we did successfully in 1967/68. If the Chinese accept that they are unlikely to achieve such an objective they might permit the continuation of the Colony's status
quo
8.
In these circumstances I invite my colleagues to look againat the options mentioned in
paragraph 4.
Course (a) Do nothing
This appears to have nothing to commend 16 save in the face of an utterly intractable
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