TNAG-0568-FCO40-701-Planning-paper-on-Hong-Kong-1976 — Page 201

386 D073815 140M 5/74 Cr.P.C. Gp.839/3

SECRET

NOTHING TO BE WRITTEN IN THIS MARGIN

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THIS IS A COPY

THE ORIGINAL HAS BEEN RETAINED IN THE DEPARTMENT UNDER SECTION 3(4) OF THE

PUBLIC RECORDS ACT 1958

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question of citizenship.

The Colony's very existence

moreover, carried with it risks of clashes with China and local unrest as in 1967. But we also gain positive advantage from the connection with Hong Kong where there are important British investments; and which acts as a centre for British investment

elsewhere in the Far Easts and a centre for international communications. Hong Kong is a useful export market and a source of invisible earnings which together probably (but not certainly since there is no established methodology of reckoning invisible earnings) outweigh the competition Hong Kong poses to British industry in home and overseas markets; an important bargaining counter in air service negotiations;

On balance we believe that the

disadvantages to the United Kingdom in the relationship with Hong Kong will probably increase, and the advantages decline, over the period in question.

5. Outweighing these calculations of advantage and disadvantage, however, is the consideration that changing the present constitutional arrangements will be extremely difficult. Unless properly handled, there is the risk of a massive exodus of Hong Kong Chinese refugees with moral, if not legal, claims to entry into the United Kingdom. There are currently some 21 million British subjects of Chinese origin in the Colony, of whom some 200,000 - 300,000 may have special claims on us through their connection with the colonial Government. The domestic political strains caused by recent exodus of UK Passport Holders from Uganda indicates how serious this problem could be for us; and the exodus from Vietnam suggests that the scale could be much greater than might be expected in advance. There is furthermore the risk of a

financial collapse of one of the world's leading financial centres which could have wide repercussions; and a contingent aid liability of substantial proportions if, as we could expect, loss of confidence in the Colony were to lead to industrial decline,

3

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