TOP SECRET
COLONIAL
OFFICE
16. Hong Kong's advorso balanco of visiblo trade with the world has boon financod mainly by incoro from invisiblos including tourism, shipping, banking and commercial servicos and through the flow of capital funds from abroad (mainly from overseas Chinoso o.g. in the U.S.A.). No prociso balanco of payments figuros are available for tho Colony but it sooms unlikely that, ovor the years, it has run any pronounced ovorall balance of paymonts deficit or has thoroforo boon a drain on the storling aroa foreign
oxchange resorvos.
17. Apart from the cost of maintaining military forces in the Colony, Hong Kong is solf-supporting. It is not in roceipt of any financial
assistanco from H.M.G. other than an intorest froo loan of £3 million mado
available in 1957 towards the extention of Kai Tak Airport.
18. Political.
A
B
I Take in slyp A
It is considered that some political benefit is derived 一人
Hong Kong is of political benefit to us as a Free World enclave
on the mainland of China. The continued influx of refugees from China demonstrates that a free capitalist society, even, of necessity, without
on the eyes of representative government is preferable, to many Chinese,to the Communist
} society of China. The loss of Hong Kong to China would be a severe blow to Free World prestige in Asia and would correspondingly boost China's prestige particularly among the overseas Chinese in South East Asia. taken back in due course precludes us from treating it as a candidate for self-government or independence. Wo are inhibited from developing ropresentativo institutions by the danger that any politics in Hong Kong would be the politics of the two Chinas and that a determined Communist minority in a genorally apathetic electorate would engincer control of such
Burgmanowa of thoga problema. both
Mina
A
We have, however, met little international critición
This score
even in the United Nations; most of
The criticising has been dobettin A
from within this country.
PALAPADA AL KROMAT
21. Our position in Hong Kong is an impediment to the development of better relations with China. The attack on our Mission in Peking was the direct result of our failure to comply with a Chinese ultimatum on
Recent the treatment of Communist Press representatives in Hong Kong. exchanges with the Chinese suggest that members of the British Mission and also possibly other British subjects in China are being held as hostages by the Chinese in order to try to secure a change in our policy
of firmness in Hong Kong.
lis
.n
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