And the UK gave in to PRC's threats. Was PRC really willing to start a war with the UK? Or were they bluffing, and the UK fell for PRC's bluff? Or maybe, the UK was never really that keen on HK democracy, and PRC's threats were just a convenient excuse to avoid doing something they weren't very keen on doing anyway?
> We'd just had the Korean War, Britain alone wouldn't have won a rerun, the West might
The Korean War is not exactly comparable. Neither North Korea nor South Korea were nuclear armed states (during the 1950s), although they both had nuclear powers as allies. A war between UK and PRC in the 1960s would have been a shooting war between two nuclear powers. Would the PRC really had been willing to risk such a thing? Especially given the state that PRC itself was in (millions of deaths in the Great Leap Forward, followed by the chaos of the Cultural Revolution, its isolation the Sino-Soviet split, an economy vastly weaker than it has today, etc.)
Err, there were 5x more Chinese troops in the Korean War than North Korean, and Soviets flying air cover. It would be directly comparable, if there were a Communist invasion, except I really doubt there'd have been support from the Western Allies without that invasion first. Even then I'm not sure - there were repeated concerns Korea could have escalated into WW3.
A HK airlift would be logistically challenging to say the least, and I don't believe it would have had similar chance of being successful. Look at Kai Tak, and its famously awkward mountain avoiding approach back in the 1950s. Berlin was universally acknowledged as strategically important in the newly hatched Cold War. The East and West had been nose to nose militarily in Germany since 45. Berlin was served by multiple source airfields, several air corridors and flying boats onto the lakes. HK would probably have had to be entirely sourced from Taiwan.
Yet Berlin succeeded as much from the counter blockade, that actually turned out to be surprisingly damaging to the East, as the huge scale of the sustained air lift. I can't picture a HK airlift around the same era as being nearly as successful.
I just don't see it playing out OP's way at all. Events would rapidly turn it to something very different and dangerous.
In wondering how, I end up with only lots of unanswerable questions. Cut half our presence in Germany so soon after the Airlift? Cut the naval and air shadowing of Moscow? Move a couple of carrier groups to HK? What;s the USSR going to do in response in Europe? How to work the nuclear threat? Polaris didn't arrive until the end of the 60s. So move all our 50s nuclear deterrent, which was only ready mid to late 50s, to Malaya with then Communist inclined rebels maybe? I think Victors, Vulcans and Canberras needed more runway than Kai Tak then had. They weren't carrier capable. So where you going to put them? Taiwan? Except Taiwan was predicted at risk of falling through the 50s, which is why US military support didn't come until the end of the decade. Besides, that starts to look like the West mobilising for WW3. A robust response becomes more and more likely.
OK I can't make this novel's plot work. :)
We'd just had the Korean War, Britain alone wouldn't have won a rerun, the West might. Support for doing it again, without hostility from the other side first is just about unthinkable. Britain might have been able to achieve better terms on Kowloon and New Territories a hundred years previously during Pax Britannica, but those territories were only there as uninhabited military buffer zone for the transhipment port, naval base and coaling station. So when Britain could, no one thought it important, there was no one there.
Development and them mattering came much, much later. Only really after the Chinese revolution started to provide an endless stream of well educated workers and families with a dislike of Communism. Now the UK started moves to democratise - there was getting to be a population that cared, and which fit with the policy of majority rule before independence, in the post war decolonisation era.