TNAG-0281-FCO40-317-Visit-of-the-Chancellor-of-the-Duchy-of-Lancaster-to-Hong-Ko-1970 — Page 80

CONFIDENTIAL

More real is the constant watchful presence of Peking. A failure of

Year to rendi.

exports to expand sufficiently to keep pace with a growing population with

rising expectations could lead to civil disorder (of which the disturbances

in 1966 and 1967 gave a foretaste). And civil disturbances (even if not

85-90

deliberately fomented by China) could easily reach the point where whatever

the economic use to China of Hong Kong (and in these circumstances it would.

And

rapidly diminish) the Chinese Government might feel that for political reasons

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it could not stand aside.

6. And this is clearly linked with the problem of access to world markets.

ACVANC

More than half of Hong Kong's exports go to North America and Western Europe

The

(35% to the US, 11.6% to the United Kingdom a share which has fallen

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breciably in recent years viability these markets must take a growing volume of Hong Kong's goods. Hong

and 9.4% to the EEC). To ensure Hong Kong's

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Kong can provide these at the right quality and price across existing tariffs.

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But a world wide swing to protectionism triggered off by the United States; or

a restrictive import policy pursued by an enlarged EEC could be a serious

threat.

7.

It is against the background of these general problems that the particular

problems of Hong Kong raised by our prospective entry into the Communities

need to be considered. But first the United Kingdom interest in Hong Kong needs

to be more closely defined. New Zealand and Commonwealth sugar have long

been major political issues in the context of our entry. But what is there

for the United Kingdom in seeking the best terms possible for Hong Kong?.

INTERESTS OF THE UNITED KINGDOM

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8.

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Partly the answer lies in the simple fact that HMG is responsible, for

the Colony and its welfare; this responsibility for four million people (40%

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more than the population of New Zealand) is not one which any United Kingdom

administration would lightly cast aside.

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Furthermore the loss of Hong Kong

if a decline in its prosperity led to civil disturbances and a takeover by

Peking would be a major reverse for the West in the Far East, would lose us

and the Americans a valuable observation post on Communist China and, 'far

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