NOTHING TO BE WRITTEN In this MARGIN
CONFIDENTIAL
Just under £350 milion out of about £1000 in 1970)
(mithion
BENEFITS TO CHINA OF EXISTENCE OF HONG KONG
7.
The Chinese derive considerable benefits from
the Colony, which provides them with easy access to
world markets and serves as an invaluable base for
With the propaganda and intelligence activities. rapidly changing situation in South East Asia, the value of the Colony as a listening post and staging
point will increase. Hong Kong also depends
heavily on China for essential supplies, especially
food. It is of direct and substantial economic
at least value to China; remont one third of China's foreign
exchange earnings comes via the Colony. These earnings play a major role in financing China's
trade deficits with other areas of the non-
ing
Communist world. Balance against these solid
advantages the presence of a flourishing colonial society on Chinese territory must be a source of
The Russians
some embarrassment to Peking.
continue to tease the Chinese on this point but the
Chinese have so far swallowed their ideological pride presumably because of the tangible benefits
which the Colony brings.
FUTURE CHINESE POLICY
8. Much will depend on how the Chinese leadership evolves over the next decade. At present Chou En-lai
seems firmly in the saddle. As long as he remains
at the helm, it is reasonable to expect that policies of comparative restraint and realism as
But Chou is 73 regards Hong Kong will continue.
and it is much more difficult to predict the
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