TNAG-0754-FCO40-958-Threat-to-Hong-Kong-1978 — Page 33

UK EYES A

THIS IS A COPY

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

PUBLIC RECORDS ACT 1958

for specific export commodities in Kowloon after the style of the mini-fairs held

on the mainland), for utilising trade contacts which could not be made in China,

for drawing on the financial resources for trade financing and, not least, for

gathering commercial intelligence.

12. Transportation.

The establishment of a container terminal at Hong Kong in

1972 enhanced the entrepot value of Hong Kong to China because such facilities

were non-existent on the mainland, although container facilities are now being

established at Whampoa near Canton. It is not yet clear what effect the Whampoa

facilities will have on the Chinese entrepot trade but the steady growth of Chinese

exports will probably mean that it is very little. As the volume of Chinese exports

to and through Hong Kong have increased so the land transport facilities have

commensurately improved. A new railway marshalling yard was built on the Hong Kong

side of the border at the Lo Wu crossing point and refinements to improve freight

carrying capacity are constantly being made to the railway on both sides of the

border.

INVOLVEMENT IN COMMERCE. INDUSTRY AND FINANCE

13. Extent of Involvement. Chinese communist organisations are to be found in

almost every economic and commercial activity in Hong Kong ranging from banking to

trade unions through petrol retailing (see para 8), monosodium glutinate (food

flavouring) manufacture to film production. The ramifications of Chinese involvement

are difficult to trace but, either through direct ownership or control of sufficient

equity, China appears to control:

13 banks of which 4 are incorporated in Hong Kong and 9 in China;

- 6 investment companies which can be used as holding companies to gain

functional control over any commercial concern in which China is interested;

3 insurance companies;

- 3 manufacturing firms;

- 3 major commercial agencies and distributors plus over 400, mostly privately

owned, agents and distributors for Chinese products who reportedly remit their

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UK EYES A