CYPHEN/CAT A
SECRET
1698
حمد
PRIORITY HONG KONG
TO COMMONWEALTH OFFICE
24
TELNO 925
24 JULY 1you
HWA /
SECRET.
ADDRESSED COMMONWEALTH OFFICE AS MY TELEGRAM NO. 925 DATED 24TH JULY
REPEATED FOR INFORMATION TO PEKING.
$90)9 (59,
PEKING TELEGRAMS 505 AND 586 : SANCTIONS AGAINST CHINA.
I REGRET THE TIME IT HAS TAKEN, BUT WE HAVE BEEN ANXIOUS TO EXAMINE THE POSSIBILITIES SUGGESTED BY PERING IN PARAGRAPH (C) OF TELEGRAM
586 AS CAREFULLY AS WE COULD.
2. IT WOULD BE POSSIBLE TO DO VERY LITTLE IN HONG KONG AGAINST
CHINESE TRADE WITHOUT LEGISLATION. MORAL PRESSURE UPON INDIVIDUAL
FIRMS IS UNLIKELY TO ACHIEVE MUCH IN THIS FREE COMPETITIVE SOCIETY. 3. LEGISLATION WOULD HAVE TO BE EITHER SPECIFICALLY DIRECTED AGAINST
CHINA OR NON-DISCRIMINATORY. IF IT WERE SPECIFICALLY DIRECTED AGAINST CHINA ON TRADE ..ATTERS, IT COULD OBVIOUSLY BE MADE VERY EFFECTIVE BUT DEPENDENT AS WE ARE UN CHEAP CHINESE FOODSTUFFS (54% OF QUR IMPORTS
FROM CHINA ARE OF FOOD) AND TO A LESSER EXTENT WATER, THE RISKS OF RETALIATION AGAINST HONG KONG BY CHINA IN THE FACE OF EVEN MINUK ECONOMIC RESTRICTIONS WOULD BE QUITE UNACCEPTABLE.
4. IF LEGISLATION WERE NON-DISCRIMINATORY IT WOULD BE RELATIVELY
INEFFECTIVE AGAINST CHINA DEPENDING UPON THE PRECISE METHODS USED AND IT WOULD BE MUCH RESENTED BY ALL NON-COMMUNIST ENTERPRISES.
I HAVE BEEN UNABLE TO IDENTIFY ANY MEASURE WHICH WOULD BE SUFFICIENT-
LY EFFECTIVE AG.INST CHINESE TRADE AND EARNINGS TO JUSTIFY THE OUTCKY WHICH WOULD AKISE FROM NON-COMMUNIST FIRMS AND THE DAMAGE TO
HONG KONG'S PROSPERITY.
R:
591
SECRET
25,7.
/5. AS