TNAG-0122-FCO40-158-Future-of-Hong-Kong-1968 — Page 55

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a very different attitude to trade with China on the

part of the U.S.A. (which takes 37% of all Hong Kong's

exports) and some understanding with our other Western

allies and friends who trade with China and Hong Kong that

they would not regard the change of administration as an

opportunity to reduce drastically or cut off altogether

their trade with the latter.

If we cannot make use of this

card then we shall be reduced to such economic counters as

continuing to give access to Hong Kong products in our own

markets (which take only 17% of all exports) and the use

of Hong Kong assets held in London (not all of which could

be handed over and which are in any case equivalent to only

one and a half times China's annual earnings of foreign

exchange through Hong Kong).

78.

Overt American involvement in a mutual arrangement with

China to hand over Hong Kong seems out of the question given

present U.S. policies towards China. In this situation the

best we could expect would be that fear of American reaction

to a forcible take-over might be a factor inclining China to

seek an agreed solution and, in doing so, not to press us too

hard. On the other thand, if American attitudes were to

change to the extent of lending their weight to such a

transfer, the value of Hong Kong's trade with the U.S.A.

would exercise a restraining influence on Chinese attitudes

in our exchange with them.

79. It is unlikely that we could make much play with the

fact that in international law Hong Kong Island and the tip

of Kowloon peninsula were ceded to us in perpetuity (see

paragraph 1 of Annex A), in the face of China's attitude

/that

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