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assets (estimated recently at £40 million) would be very
vulnerable and would undoubtedly be expropriated.
D. CHINESE INTERESTS
28. Hong Kong provides China with a window on the outside
world, and with an easy point of access for trade and travel.
It has served as a centre (which we have evidence they value)
from which to mount subversive activities against the free
world, particularly in the field of subversive propaganda.
Foreign Exchange Earnings
29. China earns a large surplus on visible trade with the
Colony (£170 millions in 1966). The bulk of China's exports
to Hong Kong are foodstuffs (40%-50%); there is also a
considerable market for Chinese textiles, simple machinery
and other manufactured goods. From this trade surplus, from
remittances by Overseas Chinese in or through Hong Kong
(estimated at £30-£35 million in 1966) and from the
operations of Chinese financial and commercial enterprises
in Hong Kong, total foreign exchange earnings estimated at £200-210 million accrued in 1966 (over a third of China's total earnings of foreign exchange).
30. These earnings, which are regularly converted into
sterling, have played a major role in financing China's trade
deficits with other areas of the free world with the
industrial countries of Western Europe in 1959-60 and again in 1965-66 and with Canada, Australia and other major grain
exporters to China.
31. Earnings in 1960-62 averaged some £80 million. Their rapid rate of increase by 1966 is unlikely to be maintained and from now on Hong Kong's relative importance as a source
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