and even
(1) about 18 per cent of Hong Kong's imports (1966)
are re-exported and assuming that imports from
the U.K. are re-exported in roughly this proportion, this gives £10-12 million of U.K. exports which it should be relatively easy to
re-direct to their ultimate destinations;
(11) well over 60 per cent of U.K. imports from
Heng Yong are of textiles and clothing;
in general conditions of full employment the U.K.
textile industry can be expected in the
foreseeable future to have some surplus capacity
so that (see (iii) below) increased domestic output could reasonably rapidly be substituted
for some part of our imports from Hong Kong;
(iii) while the loss of imports of Hong Kong clothing
and textiles would generate pressure for
increased access to ou· market from other
controlled low cost suppliers such as India and
Pakistan, there would be countervailing
pressures from domestic producers, and in any case the scale of low ccet imports is (broadly)
a matter within H.M.G's control, so that it is
reasonable to assume that increased supplies
from low cost roducers would be permitted only
in return for countervailing economic advantages.
While on the other hand the balance of payments gain from
ceasing to service Hong Kong's sterling balances (see paragra,h 10 below) would not last
indefinitely, the
most reasonable conclusion would seem to be that as
compared with 1966, the net balance of payments affects
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