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territory.
They nevertheless gain great advantage from the Colony's
existence. In particular Hong Kong provides China with a valuable source of foreign exchange (some £750 million a year) from invisible
earnings, as an importer of goods, mostly food for local consumption,
and as an entrepot for Chinese exports elsewhere. It serves China
as a point of contact with the Western commercial and financial world
without the necessity of allowing foreigners to live in China.
20. Hong Kong came under heavy pressure in 1967/1968 during the Cultural Revolution when widespread unrest throughout China overspilled into the Colony. The imprisonment of rioters and the refusal to bend
to Chinese pressure for their release led to the sacking of the British Mission in Peking for which China has since apologised. China now displays a more pragmatic attitude towards Hong Kong and has been notably co-operative in recent years. It maintains large numbers of officials and many trading and other organisations in Hong Kong. The Hong Kong Government has regular contact with them and there is a relaxed and easy relationship.
21. There are, however, two outstanding though not very live issues between us and the Chinese at present. The first concerns their request to appoint an official representative in the Colony. In 1973 Sir Alec Douglas-Home explained to the then Chinese Foreign Minister that we would not accept the proposal. It has not yet been raised with the present Government but it is possible that it may come up again wher the Foreign and Commonwealth Secretary visits China in the spring of next year. The second issue relates to the level of Chinese immigration into Hong Kong. Between 1971-73 total immigration from China into Hong Kong rose from less than 13,500 to some 74,000, imposing a heavy strain on the Colony's resources. After representations to the Chinese the number of legal immigrants (those with Chinese exit permits) has been reduced. Also following discussions with the Chinese all illegal immigrants apprehended on first entry into the Colony (except for humanitarian cases and refugees) are now being returned to China.
INTERNAL POLITICAL AND SOCIAL BACKGROUND
22.
After the Chinese revolution in 1946, large numbers of Chinese
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