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ternational airport at Kai Tak is a valuable point on trunk and rogional
major air routes and the Colony providos the only aircraft ropair facilities for
thousands of miles. Air traffic rights at Hong Kong havo boon of increasing importanco to the United Kingdom in tho nogotiation of Air Servicos Agroo-
monts with othor countries; tho monopoly of cabotago rights at Hong Kong onjoyod by B.O.A.C. has boon of great valuo to that Corporation. Tho
SEACOM telocommunication cablo link botwoon Singapore and Australia passos
through Hong Kong.
12. Economic. Our exports to Hong Kong in 1966 woro £65 million f.o.b.
of the same order as (greater then your oxports to Japan). Prospects have boon good and indood
the lovel has risen from £41 million in 1960. Exports covor a wide rango, including a good deal of machinory and transport oquipmont and othor metal goods. A proportion goos on to other markots through Hong Kong, but vory
littlo now goos on to China. If the Hong Kong market was lost to us, wo might
savo what we could soll direct in the markets hitherto supplied through
Hong Kong. Clearly a lot of those frustrated oxports would bo difficult to
sell olsowhoro at first.
13. Our imports from Hong Kong in 1966 woro £81 million c.i.f., of which £30 million was in clothing and £18 million in toxtilos. If theso imports
wore totally stopped, thoro would bo sono substitution, particularly from
[ Take in ship] othor Eastern suppliors, of all typos of goods except textilos. The exelusion
of those cheap supplies might lead to a rise in prices of certain goods in the United Kingdom. We would, of course, bo relieved of the ombarrassment
caused to tho toxtile and cortain light industries hero by the preferential
ontry and compotition of Hong Kong oxports to this markot; and in our rolations with other countries whero Hong Kong exports have caused somo
disruption.
14. Our investment in Hong Kong and our oarnings from such invostnont
is an aroa in which figures and facts are subject to vory considorable doubt.
Direct investment may be as high as £40 million and portfolio invostmont about the samo figuro, making a possiblo total of about £80 million. Earnings of profits and dividends are comparatively modest about £10 million a yoar,
We pay out more in interest on sterling balanese, Hong Kong's sterling balances are of the order of £330 million (private holdings £130 million, official holdings ovor £200 million). A substantial proportion of thoso balancos roprosonts the storling backing in the currency fund (£194 million).
15. Hong Kong is a mombor of the starling aroa and koops its rosorvos in storling; but in practico tho Colony has boon grantod wide dispensations from the ordinary rulos of memborship. Spodial arrangomonts have boon mado to
onablo tho ontropot trado to continuo which involvo pormission for a froc
market in U.S. dollars.
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/16. Hong Kong's
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