which are at present the target of their main United Front effort. Such
a move would, of course, also reduce the economic value of the Colony to
the communists, if conducted for any prolonged period.
BANKING AND INSURANCE
27.
The decline in trade and the slow recovery in communist business
circles has been reflected in the communist owned banks and insurance
companies in Hong Kong which were adversely affected by the local
disturbances in 1967 and the upheavals of the Cultural Revolution in
China. Many banks lost a proportion of their deposits, and although there
has been a continuing growth in communist bank deposits since the beginning
of this year they are not apparently keeping pace with the general
improvement in the position of banks in Hong Kong. However, as public
confidence returns and more stable conditions continue in China, there
is every likelihood that the position of communist banks will continue to
improve. Chinese foreign exchange purchases through Hong Kong have also
increased this year; an estimate made in October put the growth at 15%
increase over 1967 although devaluation of the pound will no doubt have
had some influence on this rise.
28.
Efforts to improve their banking position during the last few
months have included taking over complete control of the Chi Yu Bank and
its two branches and the opening of the new branch of another bank. There
are at present five C.P.G. owned banks and eight C.P.G. state/private
banks in Hong Kong which between them control 56 branches throughout the
Colony.
29.
Communist insurance business is not believed to have recovered
fully from the reverses it suffered during confrontation when business
fell to some 34% below anticipated levels. However, like the banks,
insurance depends largely on public confidence and growth in trade, and
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