IN CONFIDENCE
ANGLO-HONG KONG RELATIONS
1.
Hong Kong is constitutionally and politically dependent upon Britain and it is generally recognised that acceptance of this dependence is essential if Hong Kong is to retain its separateness from China. In practice Hong Kong enjoys a considerable degree of autonomy in the management of its own affairs, particularly in the commercial, financial and economic sectors.
DEFENCE
2.
Security and defence are live issues and the armed forces play a significant role in the Colony's affairs. The garrison in Hong Kong consists of four infantry battalions (three Gurkha and one British), a Gurkha engineering squadron, five naval patrol craft and a squadron of RAF helicopters. The defence costs agreement, whereby Hong Kong makes payments in respect of the UK forces defending the Colony, is under review at present.
CHINA AND HONG KONG
3. The Chinese Government considers the Treaties relating to the cession of Hong Kong and the lease of the New Territories as "unequal treaties" forced on China during a period of internal weakness and does not recognise them. The Chinese regard Hong Kong as a problem
In the left over from history, to be settled when the time is right. meantime, they are content to leave things as they are, particularly in view of the value of Hong Kong as a valuable direct source of convertible currency (estimated at between 30% and 40% of the total Chinese earnings of foreign exchange), mostly earned from foodstuffs, invisibles and remittances to relations in China. It is also, as China's only deep water port, an important entrepot.
4. During the Cultural Revolution Chinese unrest spilled over into the Colony, especially in 1967/68. The sacking of the British Mission in Peking followed the imprisonment of rioters in Hong Kong and the refusal to bend to Chinese pressure for their release. China now displays a pragmatic attitude towards Hong Kong and has been notably co-operative in recent years. There are substantial, and
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