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statistics are right up to date. Another small example is on

the first page where the figures of doctors and hospitals for the New Territories only are given, ignoring the fact that Hong Kong is an urban unit where hospital facilities are rightly concentrated and within easy reach of all. Into these selective statistics are slipped, also as facts, blatant and complete untruths. The best example is Note 1 on page 39 which alleges that the name of Tsoi was picked out of a hat as the first person

to be executed.

5.

The booklet opens with a historical section designed to show that Hong Kong has been a disgrace from the beginning. Most of the facts in this section are true, but not very relevant to today's problems. The next section on the Administration of Hong Kong explains fairly enough the lack of representative institutions in the Colony, but dismisses as specious the argument that China would frown on steps towards democratisation and self-Government. The booklet describes the powers of the police as "sinister" and claims that the police force is "a crucial element within corruption and crime". It draws no contrary lesson from the arrest of Hunt and Godber, or from the fact that the police, and all public

servants in Hong Kong, have a degree of accountability for their wealth, through Section 10 of the Prevention of Bribery Ordinance,

that is unknown in the UK.

6.

The third section on the economy is highly tendentious. A constant theme throughout the booklet is that "Britain has exploited Hong Kong as a detached component of the UK". The main "evidence" for this is the repeated allegation that Hong Kong's surpluses have been used to prop up the pound. There may have been some truth in this in the past. It is quite untrue today. Like

Australia and other sterling holders, Hong Kong is free to choose whether to accept the sterling guarantee or to diversify its reserves. If it chose the latter it would not make any appreciable difference to sterling. The banks' sterling was at one time included in the official reserves at the request of Hong Kong. They withdrew of their own choice in 1973. The other theme throughout the booklet is that Hong Kong has acted as a funk hole for British capital which has used the Colony and its cheap labour to build up fast and vast profits for British business.

But on page 23 it is admitted that only some 20% of the new investment in

CONFIDENTIAL

/Hong Kong

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