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may then intervene to restore order and protest its compatriots. believe that the outcome of the present crisis will depend immediately not on Peking but on the determination of the local communists to continue their campaign and the success of the Hong Kong Government in maintaining its
authority.
Chinese Pressure
6. There are various means by which the Chinese could exert pressure
upon us. There are massive communist propaganda resources inside Hong
Kong, including the New China News Agency, newspapers, book-shops and
cinemas. Recent events have shown that most Chinese in Hong Kong are capable of withstanding this propaganda in the short torn but the impact could be severe if public confidence were to be shaken by other pressures.
7. Demonstrations and industrial action can easily be instigated in the
crowded conditions of Hong Kong. These, if widespread and prolonged,
could exhaust the police and lead the military forces into becoming fully committed to the task of maintaining internal security. It is easy enough
for the Chinese to mount demonstrations on the frontier, which could also
have an effect on our own police and military resources and severely shake
public morale. Hong Kong's economy could be seriously damaged by prolonged strikes fomented for political reasons. In general, however, only a small
proportion of the Chinese in Hong Kong san be described as pro-communist
and, unless the communists can create conditions which will give general
grounds for dissatifaction or the impression that they are winning, they
may find it difficult to mount widespread disorders and strikes.
8. Hong Kong is, however, heavily dependent on China for its food and
water. Food from alternative sources could be found but would be much
nore costly and the increased food bill could, unless subsidised to the
consuner, have a serious impact on the cost of living and therefore on wage
levels and Hong Kong's competitive position in export markets. Hong Kong's
own resources could bear food subsidies for a limited time only. Given
normal rainfall and strict rationing, Hong Kong should be able to survive
on her own water resources through the next dry season (from October to June) even if the Chinese fail to resume water supplies in October under the
present agreement. If, however, the rains fail this year and China refuses
to make further supplies available, a serious situation would arise. We could, however, cope with this by organising an emergency tanker operation.
Next year Hong Kong's own water storage capacity will be trebled when a new
reservoir cones into operation. Moreover, action by the communists against Hong Kong's food and water supplies is not without its disadvantages for mainland China also, both economically and politically.
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