CONFIDENTIAL
2
UK/Hong Kong Relations
4.
Over the past 2 years or so, Hong Kong has proved a positive
factor in the development of Sino/British relations. It is also an
important market for British exports (although there is still an
imbalance in trade) and a valuable asset in civil air services.
negotiations. But the British connection with Hong Kong also has
disadvantages, particularly conflicts of our economic interests, and
the potential immigration and other problems which would result if
China were to take over Hong Kong.
5. In fulfillment of our defence responsibilities, four infantry
battalions together with naval and RAF units are stationed in Hong
Kong. Seventy-five per cent of the cost is borne by the Hong Kong
Government.
6.
Relations between Britain and Hong Kong require careful handling.
The British image of Hong Kong is as far removed from the facts as
the view of Britain held by many people in Hong Kong. The impact of
competition from Hong Kong exports, particularly textiles, upon
employment in Britain has aroused strong feelings. In Hong Kong,
there is a widespread feeling that the United Kingdom does not do
enough to defend llong Kong's interests internationally. But there
are no major bilateral problems at present.
Internal Developments
7. Over the past few years the Hong Kong Government has carried out
an important programme of social developments, with housing as the
first priority. The Government has also mounted a major campaign
against corruption. This, and the rapid growth of the Hong Kong Police
Force in recent years, resulted in a near mutiny of the Police at the
end of 1977. The Hong Kong 'economy has made a good recovery from the
recession in the mid-1970s and has sustained high growth rates in the
last few years.
There have recently been problems of over-heating;
corrective measures were taken in the recent budget.
/Current
CONFIDENTIAL