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Se Aver B
COLONIAL
OFFICE
16. Hong Kong's adverso balance of visible trade with the world has been financed mainly by income from invisiblos including tourism, shipping, banking and commercial servicos and through the flow of capital funds from abroad (mainly from overseas Chinese c.g. in the U.S.A.). No prociso balanco of paymonts figures are available for the Colony but it sooms unlikely that, over the yoars, it has run any pronounced overall balance of payments deficit or has thoroforo boon a drain on the storling area foreign
exchange reservos.
17. Apart from the cost of maintaining military forces in the Colony, Hong Kong is solf-supporting. It is not in receipt of any financial assistanco from H.M.G. other than an interest froo loan of £3 million mado
available in 1957 towards the extention of Koi Tek Airport.
18. Political. It is considered that some political benefit is derived
from our presence in Hong Kong. Its people possess a relatively high standard of living for the Far East and it serves to demonstrate that there
is an alternative system to Communism which works successfully.
19. Our presence there is a British contribution to inter-dependenco. The Americans recognise its usefulness.
20. There are on the other hand a number of political disadvantages in our
position. China's attitude that the Colony is Chinese territory to be
taken back in due course precludes us from treating it as a candidate for self-government or independence. We are inhibited from developing representative institutions by the dangor that any politics in Hong Kong would be the politics of the two Chinas and that a determined Communist minority in a generally apathetic electorate would engineer control of such institutions. There is a widespread awareness of these problems, both within and outside Hong Kong; but the form of government prescribed for this thriving and progressive community does stand out as a startling anomaly in
et litte a our post-war record of colonial administration. To some extent it should be
possible to meet criticism on this score and to provido a reasonable degree
of popular participation in govornmont by dovoloping fully roprosentativo local govormont institutions, and stops to this end are now being taken.
21.
IN
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Our position in Hong Kong makes us vulnorable to pressures from China aimod possibly at influencing our policios elsewhere (c.g. our support for America), although thero has been no clear indication so far that pressure
has been so applied.
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