CONFIDENTIAL
Reference
4. Similarly whilst the Hong Kong market is available to all, the United Kingdom has traditionally provided Hong Kong with a very much better and more open market than our principle competitors. This may be
advantageous to us but does cause friction in our relationships for instance with the EEC where we naturally have to fight for Hong Kong as our dependency. In a different context the same appears to me to be so in respect of our relationship with China. As I understand the messages coming from Peking the improvement of relations with Britain is principally because of our major role within the EEC and the Chinese see that the latter is a counter-balance to the USSR. Whilst at the present time Hong Kong is not a major difficulty in our relations with China it certainly made our relations more difficult for the last 20 years and in 1967 because of Hong Kong ours became the first diplomatic mission to be burnt in Peking since the Boxer Revolution. It may be that our final withdrawal from Hong Kong will be peaceful but there is always the possibility of quite considerable difficulty when the Chinese decide the moment is right. This could make our relations with the world's most populous nation difficult. Such hazards cannot arise in the relations between the other Western nations and China.
5. To sum up, I think that whilst Hong Kong as a brilliant success story in the Far East does bring the United Kingdom a certain intangible prestige, the practical benefits of our presence are enjoyed by all the major Western trading nations. Whilst we all benefit equally it is inevitably the United Kingdom who has to bear the responsibility on the less advantageous side of the coin.
29 October 1973
M A Goodfellow
Hong Kong and Indian Ocean Department
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