CONFIDENTIAL
7
HONG KONG/CHINESE RELATIONS
General
15. In Chinese eyes the Treaties relating to the cession of Hong Kong (paragraph 1 above) were amongst the "unequal treaties" forced on China during a period of internal weakness, and the Chinese regard the whole of Hong Kong as part of Chinese territory. Nevertheless, the practical value of Hong Kong to China outweighs nationalist and ideological considerations. In particular, Hong Kong provides China with a valuable source of foreign exchange (in the region of £750 million a year) as a source of invisible earnings, as an importer of goods, mostly foodstuffs for local consumption, and as an entrepôt for Chinese exports elsewhere.
16. Hong Kong was greatly affected in 1967/68, the period of the Cultural Revolution, when widespread unrest throughout China spilled over 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. China now displays a more empirical attitude towards Hong Kong and has been notably cooperative in recent years.
It maintains large numbers of officials in eg
the New China News Agency (NCNA) and the Bank of China and many trading and other organisations in Hong Kong. The Hong Kong Government has regular contacts with them which are relaxed and easy: the indications are that the Chinese do not wish to disturb
the status quo.
The death of Chairman Mao has not caused any
change in the relationship. Hua Kuo-feng, Mao's successor, is a moderate who is continuing Chou En-lai's pragmatic approach to the development of the Chinese economy. The Chinese have said that they will be purchasing more western equipment and technology in the next few years to help with this development. Political initiatives which would radically change the status of Hong Kong, and thus cause a loss of foreign exchange, are therefore unlikely.
CONFIDENTIAL
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