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policy towards the international status of Hong Kong (see paragraph 11 below). In addition, the further development of Hong Kong can be expected to produce increasing divergence between its economic interests and our own.
5. There are some positive advantages from the connection with Hong Kong. Surprisingly perhaps Hong Kong is at present an important and positive factor in China's relations with the UK and with the outside world. It is difficult to quantify the commercial benefits. Direct British investment in manufacturing industry is very small (about £14m in 1974) and much smaller than similar investment by the United States (£40m) and Japan (£30m) but there are important British financial and commercial investments for which no figures are available. The British share of the Hong Kong market for imports (£157m in 1975) was only 6% of the total as compared with Japan (21%) and the United States (14%). Hong Kong accounted for only 0.8% of total British exports and is declining as a percentage of the total. Hong Kong exports to Britain in 1975 were valued at £307m, % of total Hong Kong exports, producing a deficit for Britain in the balance of trade of £150m. A Hong Kong estimate of the net value to Britain of the trade in invisibles is £129m annually; but the Central Statistical Office are unable to confirm this because of conceptual and practical difficulties in producing detailed balance of payments estimates on a bilateral basis. The United Kingdom gains special advantages from the connection with Hong Kong: it is an important
in air services negotiations
II. The Interests of the People of Hong Kong
bargaining counter
6. Hong Kong belongs to that class of colony which does not contain a conquered population; rather it was founded to preserve British commercial interests in the Far East. It is a population which has voluntarily gone to live there to enjoy the conditions we have created. When the territory was acquired there were only 5,000 inhabitants and there are now 42 million and Hong Kong is high
on the list of leading commercial centres of the world. public statements, Britain has made it clear that she is committed
to Bening the fate
THE ORIGINAL HAS BEEN RETAINED IN THE DEPARTMENT UNDER SECTION 3(4) OF THE PUBLIC RECORDS ACT 1958
In many
and furthering the prosperity of Hong Kong.
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