TNAG-0050-FCO40-86-Disturbances-essential-food-supplies-1968 — Page 23

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G.F. 323

CONFIDENTIAL

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local Communist agencies responsible for the marketing of Chinese foodstuffs in Hong Kong are in a position to exert a strong pressure on local retailers due to their control over supplies and prices;

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local Comminist agencies appear anxious to improve; their. control over local markets by insisting on their goods being carried by communist controlled transport firms;

however these agencies were surprised in 1967 to find out how far local wholesalers and retailers were prepared to withstand threats and moral pressure and to continue to: serve, the public;

in view of the very large number of small shops, market stall holders and hawkers involved in the retail marketing of food it will never be easy for Communist agencies (or for that matter for Government) to control the retail end of the food market;

the improvement of either local supplies or imports from overseas of any foodstuffs normally supplied by China depends upon some guarantee of the market price because merchants, banks and producers are aware of China's immense resources and seldon aware of her intentions;

a guaranteed price could be arranged by a system of Government subsidies or by restricting Chinese imports;

an unrestricted system of Government subsidies without any restrictions on Chinese imports would be a financial impossibility for Government;

any restriction of established Chinese imports would be regarded as a hostile political act by the Chinese authorities;

Government is therefore left with the choice of either setting up a strictly controlled and subsidised system of purchasing alternative food supplies from overseas sources and so developing their potential or of accepting that Hong Kong's food supplies are to a great extent dependent upon China;

unless it is prepared to face the expanse of setting up such an elaborate organisation, Government can do little more than maintain a olose watch over the food market and be ready to inform importers of any anticipated shortages of food from China;

the population appears to be aware of the realities of Hong Kong's dependence on Chinese supplies and have proved that they are capable of accepting limited shortages for a period provided they are kept informed of the position;

generally the standard of food consumed by the population is high by Asian standards and a reduction could be tolerated if it were made clear that the alternative was unacceptable;

CONFIDENTIAL

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