TNAG-0042-FCO40-78-Future-Sovereignty-of-Hong-Kong-Defence-Review-Working-Party-1967 — Page 112

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TOP SECRET

7. July's figures for Hong Kong trade suggest that the immediate

month

economic effects of Communist activity have been small. Exports were

18% up on the same park last year and re-exports were higher by an even

greater percentage; imports, because of dislocation in Chinese

supplies and the closure of the Suez Canal, were slightly down.

However, some adverse ffect is to be expected, particularly from the

very strong Communist pressure being exerted on shipping, and a close watch

situation which in the long

マ

is being kept on the economic and financial situation- pur very warying.

8.

Cave

Although we do not see this most recent Chinese move as adding to

the threat to the Colony, officials are, nevertheless, pursuing the

immediate preliminary study authorised by Ministers of the possibility

of preparing contingency plans for an evacuation of the Colony should we

be forced to withdraw. An inter-departmental team has been set up and is

at work on this.

9. You will remember that under the arrangements agreed last December

we were planning to withdraw one major unit from Hong Kong by end-March

1968. To achieve this we would have to take preliminary steps now. We

feel that in present circumstances it would be impossible to do so.

Commonwealth Secretary will be pursuing this point with the Defence

Secretary.

The

23rd August, 1967.