CONFIDENTIAL
More real is the constant watchful presence of Peking. A failure of
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exports to expand sufficiently to keep pace with a growing population with
rising expectations could lead to civil disorder (of which the disturbances
in 1966 and 1967 gave a foretaste). And civil disturbances (even if not
85-90
deliberately fomented by China) could easily reach the point where whatever
the economic use to China of Hong Kong (and in these circumstances it would.
And
rapidly diminish) the Chinese Government might feel that for political reasons
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it could not stand aside.
6. And this is clearly linked with the problem of access to world markets.
ACVANC
More than half of Hong Kong's exports go to North America and Western Europe
The
(35% to the US, 11.6% to the United Kingdom a share which has fallen
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breciably in recent years viability these markets must take a growing volume of Hong Kong's goods. Hong
and 9.4% to the EEC). To ensure Hong Kong's
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Kong can provide these at the right quality and price across existing tariffs.
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But a world wide swing to protectionism triggered off by the United States; or
a restrictive import policy pursued by an enlarged EEC could be a serious
threat.
7.
It is against the background of these general problems that the particular
problems of Hong Kong raised by our prospective entry into the Communities
need to be considered. But first the United Kingdom interest in Hong Kong needs
to be more closely defined. New Zealand and Commonwealth sugar have long
been major political issues in the context of our entry. But what is there
for the United Kingdom in seeking the best terms possible for Hong Kong?.
INTERESTS OF THE UNITED KINGDOM
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8.
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Partly the answer lies in the simple fact that HMG is responsible, for
the Colony and its welfare; this responsibility for four million people (40%
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more than the population of New Zealand) is not one which any United Kingdom
administration would lightly cast aside.
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Furthermore the loss of Hong Kong
if a decline in its prosperity led to civil disturbances and a takeover by
Peking would be a major reverse for the West in the Far East, would lose us
and the Americans a valuable observation post on Communist China and, 'far
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