TOP SECRET
ANNEX B.
HONG KONG: LONG TERM STUDY
(Amendments by Foreign Office to draft Report - OPDO (DR) (67)52)
B Paragraph 18 Political (Redraft)
Hong Kong is of political benefit to us as a Free World enclave
on the mainland of China. The continued influx of refugees from China
demonstrates that a free capitalist society, even, of necessity, without
representative government is preferable to many Chinese to the Communist
society of China. The loss of Hong Kong to China would be a severe blow
to Free World prostige in Asia and would correspondingly boost China's
prestige particularly among the overseas Chinese in South East Asia,
Paragraph 21 (Redraft)
Our position in Hong Kong is an impediment to the development of
better relations with China. The attack on our Mission in Peking was
the direct result of our failure to comply with a Chinese ultimatum on
the treatment of Communist Press representatives in Hong Kong. Recent
exchanges with the Chinese suggest that members of the British Mission
and also possibly other British subjects in China are being held as
hostages by the Chinose in order to try to secure a change in our policy of firmness in Hong Kong.
C
Paragraph 9 (Redraft)
Hong Kong in our hands is of considerable economic value to China but its contribution to China's economy is clearly not indispensable
and as the economy develops its importance as an earner of foreign
exchange will diminish. Such ovidence as we have indicates that there are differences within the Chinese leadership between the extremist group inspired by Mao who are unreservedly in favour of pushing the Cultural Revolution to the limit and encouraging "making revolution" inside China and outside it, and a second group of a more moderate and realist
attitude including the Prime Minister, Chou En-lai. It is possible that the first group might be willing to sacrifice the economic benefits derived from Hong Kong in the interests of intensifying the confrontation with the Hong Kong Government, while the second group would be disposed to control the level of confrontation in order to avoid disrupting the Colony to an extent which would danage China's economic interests. In the prosent state of confusion in China it is by no means certain that the second group would provail. Soviet jibes about China's tolerance of foreign colonial possessions on its territory will not be helpful to thom.
/D Paragraph 5
TOP SECRET