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d)
e)
There would be losses by British, EC, Japanese and US firms
Friendly Governments would blame HMG if withdrawal
in Hong Kong.
did not seem unavoidable.
We could not leave Hong Kong overnight. There would have to be a
transitional period of at least months and probably years from
the first indication of HMG's intention. During this period
the administration of Hong Kong, still in British hands,
would become progressively more difficult and would be likely
to break down. It would be impossible to retain the full
loyalty of the Hong Kong police or Civil Service, many senior
members of which would leave the Territory unless assured of
British citizenship. The right wing KMT organisations might
organise protests and there could be clashes between them and
communists. Heavy reinforcement of British forces would
probably be necessary to maintain internal security.
31. The arguments against unilateral withdrawal are thus very strong.
This does not mean that future British Governments are committed to
remain in Hong Kong for good. It does suggest that change should
come gradually, in agreement with China, but above all without losing
the confidence of the Hong Kong population. It is extremely difficult
to see at this stage how these requirements could be reconciled.
Possible Chinese Moves
32. The Chinese administration will be preoccupied with its economic
and internal political difficulties for several years. Nevertheless
some time before 1990 the Chinese Government themselves will probably
accept that some action on their part will be necessary to prevent a
collapse of confidence. Annex A discusses a number of options.
They
could overlap. It is possible that the Chinese might find it
convenient to acquiesce tacitly in the present arrangements running
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