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CONFIDENTIAL
the UK's commercial stake in Hong Kong had been falling since 1962 to a point at which maintenance of political interest and support was at risk. In consequence the Hong Kong Government has been doing everything it can to advertise Hong Kong as a market, and also to continue quietly to influence Hong Kong buyers to buy from countries which import from Hong Kong. With the help of the DoT and various bodies in Hong Kong and the UK, and in particular of the office of the Senior British Trade Commissioner, we are beginning to make headway in the UK whose exports increased by 30 per cent last year to £270 million. I believe that the target for the early 80s should be a level of British exports to Hong Kong equal, say, to British exports to Japan-surprisingly even the current rate is as much as two-thirds of UK exports to Japan, and four times that of exports to China.
8. I continue to be disturbed by the dislike of Hong Kong and prejudice against it among some political and other circles in the UK. I hope to strengthen and refine Hong Kong's information effort in the UK: I also hope that the progressive completion over the next few years of the massive plans of improvement now being implemented should help to blunt some criticism. But I remain convinced that a greater visible profit from the Colony in terms of orders received and jobs provided would help more than anything else—hence the importance of the action described in paragraph 7(b).
9. The near-mutiny in the Police was tragic. Since 1973 this Government has laid its credibility on the chopping board in a all-out fight both against the rise in crime and against corruption in all spheres of life in Hong Kong. Action against both these inter-connecting evils involved imposing nothing short of a revolution in attitudes in both the Police, the other public services and the public itself. The joint success has been considerable and by mid-1977 not only had the dramatic rise in crime been halted and turned back, but corruption has been vastly reduced. With the strong co-operation of the Commissioner of Police, the Independent Commission Against Corruption, by means of a large number of prosecutions, had installed sufficient fear into the corrupt to stop corrupt money moving and through its preventive and educational activities largely changed the fatalistic attitude of the public to corruption in either the public or private sectors. But inevitably such drastic and public action provoked repercussions in both the private sector and in the public services. Until October/November of last year these had all been successfully surmounted.
10. While the police action was basically a reaction to heavy pressure from the ICAC, there was much more to it than that. To halt and turn back crime, the strength of other ranks and officers had been expanded by over 40 per cent in four years; the Force's methods and deployment and, to some extent its chain of command, had all been changed. With hindsight one can see that inadequate attention was paid to the effect of all these rapid changes on the cohesion and well-being of the Force. In particular administration, chain of command, calibre of officer, and officer/other ranks relationships, and discipline, were in part probably sacrificed to the objectives of expansion, retraining and redeploying. As the Force came under pressure from the ICAC these weaknesses provided fertile ground in which resentment could breed and spread unchecked. The demonstrations by the Police in October/November which started as legitimate industrial action but eventually developed into a situation of considerable danger, resulted from all these factors. But it was precipitated by an increase in ICAC pressure which with the wisdom of hindsight was probably so sharp as to be imprudent, and for which I take full responsibility. The break came with remarkable speed (and the fact that it was unexpected was itself indicative of weakness in the Force's chain of command and management). Rapid and unpalatable action was necessary to restore calm and avert a breakdown in law
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