TNAG-0374-FCO40-420-Discussions-with-Sir-Murray-MacLehose--Governor-of-Hong-Kong-1973 — Page 72

CONFIDENTIAL

there was ample opportunity then to do so), nor embodied

in the agreement which we had initialled in good faith.

Mr Wang tried to dodge the issue by implying that if we and/or

the Japanese persuaded the Taiwanese to remove the nationalist

insignia from their aircraft and to alter its name from China

Air Lines to something else the problem would be solved.

Sir John Addis properly ruled this out of court as totally

impossible.

4.

If the Chinese press their point we may be faced with

the choice of acceding to the Chinese demand with little

prospect of a satisfactory outcome, or of dropping air services

agreement altogether. Mr Royle may wish to reassure the

Governor that our inclination in that case would be to drop

the air services agreement. If we gave way to the Chinese the

possible ramifications are too many to discuss in detail here.

It would probably mean sacrificing the profitable services

which CPA now run to Taiwan (CPA's earnings on this route

amount to about £8 million a year) for the dubious financial

return to BOAC of operating a prestigious but unprofitable

service to Peking. CFA would undoubtedly expect HMG to

compensate them if this happened. Perhaps more important,

HMG in the Hong Kong context would be seen to be dancing to a

Chinese tune with all the political consequences which that

would entail. On the other hand if we continue to refuse the

Chinese demand we run a serious risk of an attack for following

a two China's policy. If we are attacked on these grounds our

/position

2

CONFIDENTIAL