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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 recapture 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.
15. I should also mention the benefit that accrues to British airlines from the landing rights obtained throughout the world by being able to use landing rights in Hong Kong as well as those in the UK as a bargaining point.
16. At one time Hong Kong was viewed with distrust by the Treasury and Bank of England as causing a haemorrhage of the UK reserves as part of the Kuwait Gap, but what truth there may ever have been in that disappeared with the sterling area. Now all the evidence is that Hong Kong's considerable sterling reserves are of value to Her Majesty's Government.
17. Last year Hong Kong's imports and exports world wide taken together amounted to £2,830 million, the number of visitors to Hong Kong was 1,082,000 and the tonnage passing through the port was 14,300,000. These are substantial figures, so apart from the profit and loss account of the UK's bilateral trade, one must remember the role Hong Kong discharges as a generator of commercial activity. Its imports play a particular role in financing a significant part of Chinese purchases from abroad whether from the UK or elsewhere; it has developed into one of the great focal points of world trade, banking and communications. From this there must be spin-off for all vigorous trading countries including the UK.
18. As against this there is the cost of the garrison (said in the 1973 Defence White Paper to be £25 million net a year). There is also the political inconvenience which Hong Kong causes Her Majesty's Government through the alleged threat which its exports, particularly exports of textiles and footwear, represent to home
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