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growing loss of confidence in H.M.G's ability to maintain
order, safeguard economic stability, and preserve the
existing status of the colony. This is discussed in
Annex III. Adequate contingency planning against this
would require the co-operation of the Hong Kong authorities
and we recommend early consultation with them.
UK assets in Hong Kong
•
4. The book value of direct U.K. investments in Hong Kong
(excluding oil, insurance and banking) at end 1964 was
£26 million.
Including investment in insurance and
banking and over the three years 1963-65 taken together
the new U.K. investment totalled £7.1 million. Earnings
from direct investments for the same three years totalled
£15.8 million. As well as direct investment there is
probably a significant portfolio investment.
5. In so far as these investments are represented by fixed physical assets such as buildings (and/or by goodwill) there is clearly no prospect in the context of hypothesis(1)
of doing anything to salvage them. (The question might
arise at a later stage of whether there might in a different
political and emotional climate be a possibility of getting
compensation for them under some deal involving trade or
financial concessions to China.)
6. The problem of movable assets like ships (particularly important), commercial stocks of goods and such items as precious stones and precious metals (including bullion) will be considered in the separate exercise concerned with the physical movement of persons and property.
Hong Kong sterling holdings in the U.K.
7. If the Chinese occupy Hong Kong, they must be expected to try to assure control over the disposition of assets, whether domestic or foreign, belonging to residents of Hong Kong who are unable to escape, which would include
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