TNAG-0393-FCO40-439-Diplomatic-reports-from-Sir-Murray-MacLehose--Governor-of-Ho-1974 — Page 27

1

CONFIDENTIAL

4

/to the UK

were

bonds of. Comery, on

Vielām

Sinclai

Mesa Tramit

a year. Since 1963 the balance has been in Hong Kong's favour and in 1971 and 1972 Hong Kong's imports from the UK were £109 m., £99 m., and exports/£138 m. and £158 m. respectively. But in addition there are also substantial invisibles in the UK's favour from British activities in Hong Kong, including shipping, insurance, banking and stock market transactions. Although these trade exchanges with the UK represented only 12% of UK world trade in 1972, in the same year Hong Kong rated 20th world wide among the British trading markets and sources of supply.

12.

Hong Kong lies at the heart of the Pacific region, the fastest growth area in the world. I believe that as a base Hong Kong has assisted British exporters and investors to exploit this area. I also believe that if they wish to exploit it more vigorously Hong Kong offers an excellent starting point. It does this as a large and rapidly growing market in its own right, and as a major manufacturing centre, but also as a focal point in international banking and in communications by sea and air, and with well-established British houses of great size, strength and experience with connections throughout the Pacific region.

13.

I therefore very much welcome the vigorous efforts that are now being made to re-capture ground lost by British exporters in Hong Kong - as witness the recent industrial exhibition, the visits of Mr. Peter Walker, Sir Geoffrey Howe and Lord Thorneycroft and the work of the UK Trade Commission. I might add that while the Hong Kong Government can do little or nothing to favour British suppliers at the expense of competitors, nevertheless it would greatly welcome a balance of trade more favourable to the UK. The Colony and the Government of the Colony can only gain from evidence of British commercial success, and can only be the weaker from any appearance of failing British commercial strength.

14.

I should make an additional point on this. Hong Kong has a great potential as a British shop window in the Pacific region, and, for instance, I know of some important sales to China which resulted from Chinese missions being able to inspect plant in operation in Hong Kong. But this can also work to our disadvantage. If visitors see the streets saturated with Japanese cars they are likely to conclude that British cars cannot compete even in a British market. So the key to the use of Hong Kong as a British commercial shop window in the Far East must lie in a determined attempt to ensure that the window is full of British rather than competitors' goods.

CONFIDENTIAL