SECRET
policy towards the international status of Hong Kong (see paragraph 11 below). In addition, the further development of Hong Kong can be expected to produce increasing divergence between its cconomic interests and our own.
5.
The connection with Hong Kong has some advantages. Surprisingly perhaps Hong Kong is at present an important
and positive factor in China's relations with the UK and with the outside world. It is difficult to quantify the commercial benefits. Direct British investment in manufacturing industry is very small (about £14m in 1974) and much smaller than similar investment by the United States (4Cm) and Japan (230m) but there are important British financial and commercial investments for which no figuros are available. The British share of the Hong Kong market for imports (£157a in 1975) was only 6% of the total as compared with Japan (21%) and the United States (14%). Hong Kong accounted for only 0.8% of total British exports and is declining as a percentago of the total. Hong Kong exports to Britain in 1975 were valued at £307m, 9% of total Hong Kong exports, producing a deficit for Britain in the balance of trade of £150. A Hong Kong estimate of the net value to Britain of the trade in invisibles is £129m annually; but the Central Statistical Office are unable to confirm this because of conceptual and practical difficulties in producing detailed balance of payments estimates on & bilateral basis. The United Kingdon gains special advantages from the connection with Hong Kong: it is an important bargaining counter in air services negotiations
II. The Interests of the People of Hong Kong
6.
Hong Kong belongs to that cless of colony which does not contain a conquered population; rathor it was founded to preserve British commercial interests in the Far East. It is a population which has voluntarily gone to live there to enjoy the conditions we have croated. When the territory was acquired there were only 5,000 inhabitants and there are now 44 million and Hong Kong is high on the list of leading commercial centres of the world. public statouente, Britain has unde it clear that she is committed
In many
to pagserving to perity and furthering the prosperity of Hong Kong.
THE ORIGINAL HAS BEEN
RETAINED IN THE DEPARTMENT
UNDER SECTION 3(4) OF THE
1 PUBLIC RECORDS ACT 1958
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