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of the British Embassy in Peking.
4. The last part of the despatch (from paragraph 11 onwards)
deals with the direct benefit of Hong Kong to the UK. I find
this section disappointing. Hong Kong trades with B ritain, but
the balance of trade is unfavourable to us. It is a centre of
trade in the Far East, but not specifically British trade. The
companies which are expanding their activities from Hong Kong (shipping, textile manufacture etc.) are mostly of Hong Kong
rather than British origin.
5. The Governor himself admits that when the Colony's shop
window is full of foreign goods, this is more harmful to us than
if Hong Kong had been independent. The Mass Transit System is an
important case in point. If people think we have privileges when
we do not, we can only lose.
6. The Treasury position on Hong Kong's remaining £300 million
sterling reserves is that these are not very important in themselves,
but that stories of friction can have a disproportionate effect on
confidence in sterling as a whole. If therefore the official
Hong Kong sterling reserves disappeared quietly (as indeed the
Hong Kong banks' sterling has done), the Treasury would not greatly
mind.
7. It is true that as a vigorous trading community, Hong Kong's
existence benefits world trade, both because of the trading
opportunities it gives to others, and because of the competitiveness
of its own exports. But the UK gains no exclusive trading benefit
from Hong Kong's dependent status.
Indeed the DTI's constant
endeavour is to shift some of the burden of imports from Hong Kong
onto others.
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18.