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CONFIDENTIAL

during his visit to China in March. Deng Xiaoping accepted that the

steps taken on the Chinese side to deal with the problem had not

proved effective and said that more would be done. Since then there

has been a drop in the numbers of legal immigrants (to below 200 a

day in the last week or so), but the number of illegals has continued

to rise. Further discussions with the Chinese authorities are due

to take place in Hong Kong shortly. If the improvement in the

figures for legal immigration is not maintained one option would be

to impose immigration controls on the Hong Kong side. But this has

not been done since before the Cultural Revolution and would almost

certainly be resisted by the Chinese. It is possible that the

British garrison in Hong Kong may have to be reinforced to help deal

with illegal immigrants.

Refugees from Vietnam

4.

There are now some 24,000 Vietnamese refugees in Hong Kong

awaiting resettlement elsewhere. More than 20,000 of these have

arrived since the beginning of this year; during the last month

new arrivals have been coming at a rate of between 600 and 800 a day.

There is a real prospect of 75,000 or more refugees from Vietnam in

Hong Kong by the end of the summer. Accommodation for numbers on

this scale will be very difficult indeed. The greater part of the

recent influx have arrived in small boats, but over 6,000 came on

two freighters, the HUEY FONG and the SKYLUCK. There is evidence

that these were part of a commercial traffic in refugees organised

for profit with the active encouragement of the Vietnamese

Government.

5.

We and the Hong Kong Government have done what we can to

discourage large scale trafficking in refugees. The HUEY FONG was

kept outside Hong Kong for four weeks before being allowed in and the

CONFIDENTIAL 3.

/2,600 refugees

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