WGE (70)
August 1970
WORKING GROUP ON EUROPE
EEC NEGOTIATIONS:
CONFIDENTIAL
COPY NO 13
HONG KONG
NOTE BY THE BOARD OF TRADE
20
-970
INTRODUCTION
In considering the paper on negotiating objectives for the Commonwealth
(AE(70)7) Ministers asked (AE(70) 2nd meeting, Conclusion 1) for a more detailed
appreciation of the various economic and political considerations relevant to
the settlement for Hong Kong which could follow our entry into the European
Communities.
THE SITUATION OF HONG KONG
2. Hong Kong is the West Berlin of the Far East. But unlike West Berlin
it is a spectacularly booming economy. Three factors have been largely re-
sponsible. In the first place a substantial influx after the Communist victory
in China of factory owners, managers, skilled workers and others simply desperate
for a job even at the rates for coolie labour; these included many from the
textile mills in Shanghai; in total, three quarters of a million entered the Colony (with a population then of less than 2 million) during 1949 and the
spring of 1950. In the second place the situation was then right for a sudden
expansion of manufacturing; the immediately post war world was hungry for
consumer goods and the excellent banking and merchanting services developed in
the Colony over many years for its traditionally entrepot trade were well placed
to market a rapidly growing volume of exports. In the third place the Chinese
population ds immensely hard working and by Western standards relatively
uninte uninterested in self government, participation, democracy, social services et al;
erest
it prefers to work and make money; the fact that the maximum rate of income tax
is 15% allows it to do so.
3.
The result has been the transformation of Hong Kong from an entrepot port
into a major manufacturing centre with a very high rate of growth. In 1968
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CONFIDENTIAL