SECRET
INWARD TELEGRAM
TO THE COMMONWEALTH OFFICE (The Secretary of State)
FROM HONG KONG (Sir D. Trench)
Cypher
D. R. 7
7 June, 1967.
11
10062
223
RECEIVED IN
ARCHIVES No. 63
15 JUN 1967
LAST
182
PRIORITY SECRET No. 790.
421B3/12
Cops sent Commonweath Trade
HWB1/17
Reguntan
Addressed to Commonwealth Office (D.T.D.). Repeated PRIORITY to Peking No. 320.
"
ROUTINE
17
"Canberra No. 43.
"P.A. Singapore No. 168.
(S. of S. please pass
to all).
Canberra Telegram No. 873.
(182)
I assume that in the light of paragraph 3 of that telegram you will be considering the possibility of putting economic pressure on the C.P.G. to modify their current attitudes. You may wish to have our preliminary views.
2. There are various things that we can do locally to draw the C.P.G.'s attention to economic realities. We could, for example, prevent the opening of any more branches of mainland banks (but none are pending at present). We are looking into the possibility of other lines of action which would involve, as it were, working to rule
i.e., strict application to the Chinese of already existing regulations in the economic field as a reminder to them of the sort of pressure we are in a position to exact.
Ga
the
3. The obvious danger of some of these proposals, however, is that they would tend to diminish the economic value of Hong Kong from China's point of view or in other ways would be counter-productive and hence provide justifi- cation for the extremists who wish to continue disruptive action and refuse to count the cost. We would in any case be most reluctant to take action locally unless we could be assured of similar action in the U.K. Perhaps the most sensitive spot for the Chinese would be administrative delays in the delivery of specialised equipment and instruments such as the I.C.T. computer or components for the Vickers-Zimmer or ICI-Simon Carves fertiliser plants and the temporary holding up of the purchase by British firms of Chinese goods.
4. In this context it could perhaps be suggested indirectly to the C.P.G. through trade or banking channels (rather than officially) that in the event of further trouble in Hong Kong on the lines of the recent disturbances the economy of the Colony would be disrupted, and the flow of foreign exchange to China thereby reduced, and the ability of the C.P.G. then to pay for their imports would be seriously in
/question.
PARO
SECRET