SECRET
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 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. And the 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,
whether we like it or not.
CHINESE INTERESTS AND INTENTIONS
6.
Hong Kong is useful to China in a variety of ways: among others, as an important source of foreign exchange (at present roughly one-third of China's foreign exchange earnings are derived from or through Hong Kong); as an entrepot centre for Chinese foreign trade; as a source of financial, technical and commercial expertise; and as an international point of entry and exit. These functions developed during the years of China's comparative isolation. Their importance may diminish in the longer-term as China develops its own collaboration with the industrialised world and hence its own sources of foreign
earnings. In the short and medium term, however, Hong Kong will continue to feature large in Chinese economic planning. Current developments the campaign of friendliness towards the Hong Kong authorities, direct Chinese investment in Hong Kong, the encouragement of joint ventures between Chinese enterprises and Hong Kong firms, the improvement of transport links between Hong Kong and the neighbouring Chinese province, Guangdong (Kwangtung), the new agreement on water supplies, and the agreement for China Light and Power (the body respons- ible for power supplies in Kowloon and the New Territories) to supply electricity to Guangdong Province are all consistent with a determination to extract maximum economic, financial and commercial
-
/benefit
www.
3 SECRET