TNAG-0042-FCO40-78-Future-Sovereignty-of-Hong-Kong-Defence-Review-Working-Party-1967 — Page 76

4.

(2) that the level of Chinese purchases from the

U.K. would be unaffected by the incorporation

of the colony into China;

(3) that Hong Kong's sterling balances would be

blocked and releases would be made from them

only to selected claimants resident outside the

enlarged China.

In Section II an attempt is made to assess the realism and/or likely duration of the states of affairs assumed at (1) to (3) and to see how far modification of these assumptions would alter the conclusions arrived

at in Section I.

I.

5.

Effects on the UK economy (assuming no replacement

o existing economic relations with Hong Kong)

The U.K. balance of payments on current account with

Hong Kong in 1966 was as follows:

(a) U.K. Exports + 63.2* (a) Imports

Tillion

<

63.6*

>>

10

(b) IPD

+ 10

(c) Other

(e) U.K. Forces

(f) Earnings on

(incomplete)

5

Hong Kong ster ing balances

15

Total Credits + 78.2

Total Debits

- 88.6

Balance

10.4

There are no reliable figures for long-term capital

movements, but such indications as there are suggest that

they are small and can safely be ignored for present

purposes.

6. On the assum ̧tions in paragraph 3 (and assuming also

that China would expropriate U.K. property in Hong Kong and

therefore

/cease to pay IFD) items (b), (e) and (f) would simply cease

*Hong Kong figures.

2