CONFIDENTIAL
BRITISH EMBASSY,
PEKING.
18
E. Youde, Esq., CMG, MBE Foreign & Commonwealth Office, London, S.W.1.
Dear Teddy,
LAST
R.
MEXI
REF.
(16
7 November, 1973.
Mr Shiant
to mulait with
the desfalt.
Wand # 137/11
WHO BENEFITS FROM HONG KONG?
I have a few comments to offer on Hong Kong despatch SCR 1/4841/5511 of 11 October.
Paragraph 5. While there were recent sharp price increases in communist shops in Hong Kong they demonstrated Chinese intentions to maximise all export earnings, rather than just those in Hong Kong.
Paragraph 6. It is true that Hong Kong is a focal point in regional, international and sea communications. But once the Chinese have signed an air agreement with the Japanese and have developed their ports (we have evidence of considerable improvements in Shanghai), the value of Hong Kong in this connection will diminishi The Chinese have shown little desire to maximise Hong Kong's transport advantages by improved rail and air communications with the Colony.
Paragraph 7. The Chinese Government does not need to rely on Hong Kong to maintain its relationship with essential Western suppliers. In fact there is much evidence that the reverse is true and that the Chinese do not welcome representatives of Hong Kong merchant fim.s when they wish to discuss high technology.
Paragraphs 9 and 10. I should need a lot of persuading before I could concede that historically speaking Hong Kong has not done us any harm in China. To take only the last half century, Hong Kong has been a constant cause of embarrassment in
/ Sino-Bri tish
CONFIDENTIAL
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