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field, the ability to grant or withhold rights in Hong Kong remains an important asset in air services negotiations.
4. There are real disadvantages.
The economic interests of
Hong Kong are not always compatible with those of the UK and sometimes, eg over textiles, run counter to them. This divergence of interest could well increase as the Hong Kong economy grows and becomes more sophisticated. In the field of domestic administration it can be, and sometimes is, embarrassing for the British Government to be answerable in Parliament for the policies of a colonial government which it can influence but not readily direct. Externally, the possibility should not be excluded that Hong Kong might again become a serious irritant in UK/China relations, as happened in 1967. Finally, there is the possibility that a severe recession in world trade, accompanied by a reversion to protectionism could lead to an economic crisis and extensive unemployment which the Hong Kong Government could not handle without help from the UK.
5.
At present the advantages we derive from Hong Kong seem greater than the disadvantages. But even if that was not
-
and
so, withdrawal from Hong Kong is not a realistic option for the foreseeable future. Unless we withdrew by agreement with the Chinese, and in a way which enabled Hong Kong to maintain its prosperity it is difficult to see how that could be managed the consequences could be very painful for British interests. The bulk of the population would stay, but many, perhaps amounting to hundreds of thousands, would wish to leave and the British Government would have a strong moral obligation towards them: we would
be faced with an immigration problem which, while difficult to quantify would certainly be of major proportions. The collapse
And the
of one of the world's leading financial centres might be another consequence, and it would have widespread and very serious repercussions, not least for British financial interests. contingent liability for the payment of public service pensions
alone would be of the order of £2,000 million. In short, we are stuck with Hong Kong for so long as the Chinese want us to stay,
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