TNAG-0334-FCO40-370-Visits-of-Secretary-of-State-for-Foreign-and-Commonwealth-Af-1972 — Page 15

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swim to Hong Kong rather than to cross the land frontier.

In

the past Chinese militia have very occasionally crossed the

border to retrieve illegal immigrants and Chinese junks have been

known to land in isolated parts of the New Territories for this

purpose.

Fishing rights and disputed oyster beds have from time

to time caused friction between Chinese and Hong Kong villages.

6. The usual channel of communication with the Chinese author-

ities on all important matters affecting Hong Kong is through our

Mission in Peking. On matters of purely local interest the

channel is between the Political Adviser's Office and the New

China News Agency (NCNA) in Hong Kong. The Chinese have informally

expressed interest in establishing an official representative in

Hong Kong. This would be difficult for us to accept. It would

give the Chinese enhanced status and increased opportunities to

exert influence in the Colony.

BENEFITS TO CHINA OF EXISTENCE OF HONG KONG

7. The Chinese derive considerable benefits from the Colony,

which provides them with easy access to world markets and serves

as an invaluable base for propaganda and intelligence activities.

With the rapidly changing situation in South East Asia, the

value of the Colony as a listening post and staging point will

increase. Hong Kong also depends heavily on China for essential

supplies, especially food. It is of direct and substantial

economic value to China; at least one third of China's foreign

exchange earnings comes via the Colony (just under £350 million

out of about £1000 million in 1970). These earnings play a major

role in financing China's trade deficits with other areas of the

non-Communist world. Balancing against these solid advantages

the presence of a flourishing colonial society on Chinese

territory must be a source of some embarrassment to Peking.

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/Russians

The

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