TNAG-0032-FCO40-68-Relations-with-China-1968 — Page 215

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5. AS REGARDS Use of EXTERNAL STERLING, IT WOULD BE TECHNICALLY POSSIBLE TO REFUSE BANK OF CHINA, MUNG KÔNG PERMISSION TU

CONVERT ITS RESIDENT STERLING INTO EXTERNAL STERLING. IF THIS WERE EFFECTIVE, IT WOULD DESTROY CHINA'S INCENTIVE TO SUPPLY HONG KONG. BUT IT COULD IN ANY CASE DE SUBSTANTIALLY CIRCUMVENTAL, PROBABLY TO OUR DETRIMENT, BY CHANGES IN CHINESE TRADING PRACTICES.

6. 1 REGRET THEREFORE, THAT Theke APPEAR TO BE NO ECONOMIC MEASURES OK SANCTIONS AGAINST CHINA THAT I CAN RECONNEND TO BE TAKEN IN

•

FO PLEASE PASS PRIORITY PEKING.

SIR D

TRENCH

[REPEATED

AS REQ VESICDJ-

DEPARTMENTAL DISTRIBUTION

C.O. HONG KONG DEPT.

F.O. F.E.D.

F.O. P.U.S.D.

E.R.D.

NEWS DEPT. A.M. & T.D.

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