Trade
Cycle, molekuldse and E
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11.
The disruption created by a forced evacuation could be expected
to prevent new trading transactions between the U.K. and Hong Kong in
the short run. The blocking of Hong Kong accounts would moreover make
such new transactions difficult and unattractive, if not impossible.
H.M.G. would eventually however have to consider policy on imports
from Hong Kong, taking care to avoid action which might place an
unnecessary burden on the import of goods belonging to evacuees or on
traders with goods in transit. It would be necessary in due course to
treat Hong Kong exports as if they emanated from China. This would
involve the removal of Hong Kong from the Commonwealth preference area
and the imposition of import licensing for certain goods. Consideration
would also have to be given to the consequences for the import
arrangements for cotton textiles.
Situation of continued disturbance but not evacuation
12.
While we were not specifically asked to do so, we have thought
it desirable to deal also and briefly with a situation in which there
were no evacuation but continued disturbances. In these circumstances
there would be danger of capital flight (and of other serious and
potentially costly economic and administrative problems) arising from
a 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.
Conclusions and Recommendations
13.
In summary, our conclusions and recommendations are as follows:
In the context of a forced evacuation
A.
(1) There would be no possibility of protecting U.K. property
in the form of fixed physical assets such as buildings
(paragraphs 2 to 4 above).
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