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being (though the Colonial Secretary told me he was less sanguine and that we ought to work for abolition by Order-in-Council). But the new labour legislation is requiring very firm guidance from the Governor to keep it moving (described to me by the acting Labour Commissioner as the toughest intervention he had known).
7.
Three other initiatives are also in the balance. The Mass Transit negotiations with the Japanese are proceeding on the basis of the letter of intent, for a fixed price contract of HK$5,000 million. The Governor does not yet know whether the Japanese will keep to this. There has been no official sign that they will not. He believes that considerations of prestige will keep them to it, even if it means a subsidy from the Japanese Government. If they do abide by their offer, it would represent such a bargain for Hong Kong at present day prices, that he believes the project must go ahead, despite the financial strains. But if the Japanese demand more money or lower specifications, his present view is that Hong Kong should drop the whole project and think again. He knows (from Lord Aldington) of the proposals for British participation and reads nothing into them.
8.
The exploratory discussions with the Chinese about the return of illegals are being carefully conducted by the Political Adviser. But Mr Donald expressed some concern that when the Chinese realised that we were proposing to return those whom they did not care about, and refusing to part with wanted criminals without due process of law, the net effect on Hong Kong/Chinese relations might be negative. There would thus be little incentive for the Chinese Government further to restrict the flow of legal immigrants through Lo Wu and the overall effect on immigration might be relatively small. This casts some doubt on the exercise, though it overlooks the shock effect which the return of some illegals might have on all those contemplating illegal immigration. 9.
At the same time a group of young Hong Kong Chinese with whom I discussed the question, said that, while further immigration was theoretically unpopular, since it increased population pressure in Hong Kong, in practice nearly all the illegal immigrants had relatives in Hong Kong who would have a more direct incentive to agitate against their return to China. The return of illegals
/might therefore
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