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the Multi-Fibre Arrangement (MFA), which is due to expire at the end of this year, should work to Hong Kong's detriment. Hong Kong would like to see the present MFA extended in its present form for at least a year in order to put an end to the present uncertainty over trading prospects for 1978. The Community has still to agree its negotiating position.
Hong Kong/Chinese Relations
General
18. In Chinese eyes the Treaties relating to the cession of Hong Kong (paragraph 1 above) were amongst the "unequal treaties" forced on China during a period of internal weakness and the Chinese regard the whole of Hong Kong as part of Chinese territory. Nevertheless, the practical value of Hong Kong to China outweighs nationalist and ideological considerations. In particular, Hong Kong provides China with a valuable source of foreign exchange (estimated at £1,000 million in 1976) as a source of invisible earnings, as an importer of goods, mostly foodstuffs for local consumption, and as an entrepot for Chinese exports elsewhere.
19. Hong Kong was greatly affected in 1967/68, the period of the Cultural Revolution, when widespread unrest throughout China spilled over into the colony. The imprisonment of rioters and the refusal to bend to Chinese pressure for their release led to the sacking of the British Mission in Peking. China now displays a more empirical attitude towards Hong Kong and has been notably cooperative in
recent years. It maintains large numbers of officials in, eg the New China News Agency (NCNA) and the Bank of China and many trading and other organisations in Hong Kong. The Hong Kong Government has regular contacts with them which are relaxed and easy: the indications are that the Chinese do not wish to disturb the status
The death of Chairman Mao has not caused any change in the relationship. Hua Kuo-feng, Mao's successor, appears to be continuing Chou En-lai's pragmatic approach to the development of the Chinese economy.
The Chinese have said that they will be
quo.
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