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5. Hong Kon's main cconomic interests in relation to China are its re-establishment as the main trade channel between South China and the rest of the world, and the general resumption of trade with China, including imports of the products of China and the export to Chiņa of articles manufactured in Hong Kong. For these purposes:

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(a) it will be necessary to restore and improve

communications between China and Hong Kong. These consist of the through railway to Canton and Hankow, of shipping to Canton and to other coastal ports and up-river ports, and of satisfactory air communications with China.. The through road from Hong Kong to Canton should be completed at the earliest practicable moment.

(b) It will be necessary to establish sound relations

between Hong Kong and Chinese currency.

(c) It is desirable that the restrictions on all

imports and exports by Chinese Customs and Tariff should be reduced to a minimum.

(a) It is desirable that the circulation of Hong Kong

currency in China should continue to be tolerated. Not only is this a Hong Kong interest, but one which is to the benefit of all oversea trade with S. China.

As a temporary measure it may be necessary to control Chineso immigration into Hong Kong and remittances from Hong Kong to China. It should, howover, be possible to discontinue these temporary controls with the resumption of more or less normal conditions.

7. Of prime importance to Hong Kong is the question of tenure of the New Territories. At prosent these territories are held on a 99 years lease which expires in 1997. A period of some fifty years which will be the extent of the unexpired period of the lease upon the liberation of Hong Kong is manifestly much too short a period on which to base long term reconstruction plans.

8. Apart from Hong Kong, both Malaya and British Borneo have some limited economic interests in China. They both share Hong Kong's interest in the control of Chinese immigration. and the control of remittances from Colonial territories to China. In the case of Malaya it is likely that the control

over immigration will need to be of a more permanent character.

Colonial Office,

28TH FEBRUARY, 1945.

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