FO371-35824 — Page 14

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2.

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The China Association has always welcomed any policy -leading to a strong and stable 'Government in China, without

which there cannot be a steady flow of trade for the benefit of China and the outside world alike. The China Association does not consider that the retention of Hongkong is incompatible with this ideal and feel strongly that from the economic stand- point Hongkong should remain a British possession and be administered by the British. Some of the reasons on which this opinion is based are as follows:-

His Majesty's Government is well aware of the potential value to the country of its future trade with China, founded as it is on a tradition of efficiency and honest dealing. The China Association is convinced that such a possession is not to be lightly thrown away and that to relinquish Hongkong would gravely jeopardise that trade. It is also confident that the Chinese Government would readily agree that they have no moral right to the fruits of British enterprise, even on a purchase basis, and that any change of status of the Colony would not be in the best interests of China.

Now that Extraterritorial Rights have been relinquished, it will probably take some years during the period of reconstruc- tion before Chinese law and the arrangements for its administra- tion can be considered satisfactory and it is more necessary than ever that there be an oasis of law and order where commerce can be carried on in accordance with recognized international standards and where the individual can feel that his possessions

are safe.

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