TNAG-0042-FCO40-78-Future-Sovereignty-of-Hong-Kong-Defence-Review-Working-Party-1967 — Page 46

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ARAR

TO THE U.K.

FCONOMIC CONSEQUENCES/OF THE LOSS OF HONG KONG

Wo wore asked to consider the economic consequences

to the U.I. of no longer possessing Hong Kong.

2. If there is renewed sustained and heavy Chinese

pressure on the colony, this can be expected eventually

to lead to a reduced level of economic activity in

Hong Kong adversely affecting the level of trade and

other economic relationships with the U„K (It might

conceivably call for some measure of U.K. economic

assistance to Hong Kong.) However as the effects of

such pressure cannot be quantified the analysis in this

papor is, as a matter of convenience, essentially in terms

of a contrast between the state of affairs which might

obtain following the loss of Hong Kong with that

obtaining in 1966

*

3. Huch would depend on the circumstances in which

Hong Kong were lost and in particular how its loss would

affect our economic relations with China, Section I

below however examines the possible affects on the U.K.

balance of payments and on the U.I. economy of the loss

arbitrary (and somewhat unrealistic) of Hong Kong to China, on the basis of disregarding any

possible consequential effects on our economic relations

with China propor. More specifically the following

assumptions are made:-

(1)}) that Hong Kong would coase to exist as a

separato cconomic entity;

(2) that the access for exports from the "enlarged

China" (incorporating Hong Kong) to the U.Z.

market would be subject to precisely the same

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