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would be inimical to China's interests; and to

represent publicly that the existing understanding with

China over Hong Kong illustrates the cooperative and

The

friendly nature of our relations which is of mutual

benefit, not least of all in trade. (The recent Spey

deal, for instance, proves that China counts on our

relations being good for some time to come).

policy is not without risks and will, on best assumption

of the continuing tranquillity of China, become

increasingly difficult to defend publicly as the attention

of the Hong Kong public turns to the consideration of

the future. But it is the "least risk" policy and the

one best suited to present circumstances.

Internal Policies

20.

On the above assumptions HMG will continue to

be constitutionally responsible for Hong Kong for some

time to come. In discharging this responsibility we

must aim at an administration in Hong Kong which reconciles

as far as possible four rather different requirements.

Firstly the material and social well-being of the people

of Hong Kong are paramount and must be advanced as fast

as possible. Secondly the Secretary of State must be

able to point to action which meets criticism of the

Colony, insofar as it is reasonable, from the TUC

and also in Parliament and the Labour Party. Thirdly

action should be aimed at achieving a maximum degree of

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