TNAG-0010-FCO40-46-Kowloon-disturbances-1986 — Page 7

Prepared in

The Treasing

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TOSSIBLE ECONOMIC OFTECT ON U.K. OF DISTUNDANTS IN HONG KONG

194

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All figur s in Amillion

Political background

This note is written against the conclusion in the Spocial

· Assessment in JIC(67)(SA)39. date·l 18th May 1967, which concludes

that there is a potentially dangerous situation in which we my no

longer be able to rely on the Chineze continuing to accept the

status quo for economic reasons, but that it is still possible that

the Hong Kong Government will be able to rilo out the crisis without

any major change in the status quo. Political "leads" are being

made and there is a grave risk that the Chinese Government and the

local pro-communists will seek to force the Hong kong Government to

capitulate to thene "den ndo".

V.k, trdo

U.K. exporta wore 65 in 1966.

Prospects have been good,

an intect the level has risen from 41 in 1960. Exports cover o

wide range, including n cood deal of machinery and transport equip-

mont and other notal goods. Wo think that come proportion goes on

to other markets through long Kong, but that not much now goes on

to China.

U.K. imports in 1966 were 81 c.1.f.. This includel 30

clothing and 18 toxtilce. The textiles com un or the epocial

arrangements liniting imports from individual sources.

1

The worst situation for the U.X. balance of pa ments voula

be if the Chinese were able to prohibit all U.X. ex ort but the

economic life of the colony continued and, thoy, vore ably to sell

their goous world wide an at present. To ghould 1 55 oxporte

lose two amounts what we could mell ¡irect in the maketo hitherto

supplied through Hong Kon and what we could cell in other worl1

wide marketn. Clearly a lot of the exports would be difficult to

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