SECRET
1.
D.
RELATIONS WITH CHINA
The Communist People's Government of China (like previous Chinese
Governments) regard Hong Kong as Chinese territory, wrested from the
mainland during a period of weakness and to be recovered in due course.
The present Chinese official attitude, pronounced in March, 1963, is
that Hong Kong and Macao are legacies from unequal treaties in the past
and that the Chinese claim will be settled peacefully through negotiation
when the time is ripe. In August, 1965 the Hong Kong Government received
reports through unofficial channels of further statements by the Chinese
communist leaders which confirmed the above policy and suggested that
the "liberation of Hong Kong would not take place for many years to come.
The status of Hong Kong would not be affected if the Vietnames war were
expanded, provided that Britain did not engage in aggression against
Chincse; did not permit Hong Kong to be used as a base by the U.S.;
and provided that the Hong Kong Government did not "persecute patriotic
workers and organisations in Hong Kong". We have no reason to think that
these reports indicate that the Chinese have decided on a time scale for
their campaign for the re-integration of Hong Kong with China. While
they do seem to indicate a continued reluctance to disturb the status quo,
they also contain a fairly clear threat of action if the status quo is
for any reason disturbed in a manner which they are forced to disapprove of.
2. China has very strong economic incentives to leave undisturbed
the status quo in Hong Kong. China earns an annual surplus of some
£200m. on invisible and visible trade accounts through Hong Kong (a very
substantial part of its foreign exchange earnings), and they are making
very substantial efforts to increase these earnings. Principal sources
are food exports to Hong Kong and remittances through Hong Kong from
overseas Chinese. Direct exports from China through Hong Kong are no
longer on a large scale, but China is increasingly using the facilities
offered by Hong Kong export houses and banks for its trade with the
13.
West.
SECRET