TNAG-0122-FCO40-158-Future-of-Hong-Kong-1968 — Page 34

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Short-term Policies

43. The Chinese recognise that the events of 1967 showed they

could not achieve dominance except by the use of violence to a

degree which would have gravely impaired Hong Kong's value to them.

This price they were not prepared to pay. Their present policy

-

a

is to expand their commercial interests in the Colony and to

concentrate on building up their support. To this end they are

rebuilding the local communist apparatus and will seek to use this

apparatus to achieve by persuasion, propaganda, intimidation

dominant position in the Colony. A heightening of the level of

propaganda would probably precede another serious attempt to

achieve this dominance. The nature and intensity of propaganda

about Hong Kong, both within the Colony and outside, should

It must be recognised that our ability to bring influence

or pressure to bear upon the Chinese to modify their policies in

our favour is minimal if indeed it exists. Nevertheless, we

provide China with certain services and facilities in the fields

of commerce, shipping, banking and insurance which we could,

if necessary, interrupt. Action on these lines would probably

do no

more than inconvenience the Chinese and in any case we

are inhibited from it by the adverse effect it would have on

Hong Kong's economy. However at a moment of renewed tension,

for example if the Chinese mounted another confrontation, we

might wish to consider such action in order to cause the Chinese

to reflect on their true interests and to bring home to them

the measure of our determination to maintain our position.

We should keep under interdepartmental review what means we

have (if any) of exercising effective economic pressure upon

China.