TNAG-0109-FCO40-145-Detainees-and-prisoners-following-19671968-disturbances-1968 — Page 111

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NT.F.

Kong

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Treasury, has wide powers to regulate Banks, and powers under

the Exchange Control legislation. It would be possible to

remove the Bank of China, and other Chinese banks with branches

in the United Kingdom, from the list of authorised banks. This

would have the effect of forcing them to do much of their

foreign business through an intermediary.

The Board of Trade

could also revoke their registration as banks. Such action

would have the effect of driving the banks concerned speedily

out of business. In addition, the Bank of England could decree

that payments to China could only be authorised by itself, and

could then impose such administrative delays as it thought fit.

Both the Treasury and the Bank of England would however be

strongly opposed to such action. They would claim that, even

though we could argue that the Chinese had provided us with

ample justification, the City's reputation, and thus its use-

fulness and profitability, would be damaged if it were seen

that these pressures were being applied for political reasons.

(2) Action in Hong Kong

(૪)

In Hong Kong telegram No. 925, the Governor reported that,

after a detailed examination of the possibilities, there were no

economic pressures that he could recommend to be taken in Hong Kong.

In view of the obvious vulnerability of Hong Kong to Chinese pres-

sures, his arguments are unassailable.

6. Sir Donald Hopson in making his recommendations sought to

differentiate (Peking telegram No. 585) between what he called

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