TNAG-0011-FCO40-47-Kowloon-disturbances-1967 — Page 63

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to demonstrate their power and to keep up the morale

of their supporters.

10. We do not yet know how far the Chinese intend to

In reaching a

go in their policy towards Hong Kong.

decision the main factors will be:

(a) the undoubted economic value of Hong Kong

to China (about 40% of her foreign exchange

earnings come from there);

(b) the pressure of extremist opinion which

would put "politics" first and disregard

the economic consequences;

(c) the Chinese Government's strong commitment

to securing acceptance of their five demands

11. It is reasonable to suppose that the Chinese

leadership will be divided in their response to the

pressure of (a) and (b). The "administrators", who

are those most likely to take accourt of economic con-

sequences, are at the moment under severe criticism and

there are therefore strong pressures on them to make

concessions towards the "extremists" in order to save

themselves from further attack.

12. The most recent official pronouncement by the

Chinese on Hong Kong an editorial in the "People's

Daily" of 3 June - has placed the immediate responsibility

for waging the struggle not on China but on the people

of Hong Kong, indicated that it should be mainly

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/propagandist