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whether we like it or not.
CHINESE INTERESTS AND INTENTIONS
6. Hong Kong is useful to China in a variety of ways: among others, as an important source of foreign exchange (at present roughly one third of China's foreign exchange earnings are derived from or through Hong Kong); as an entrepot centre for Chinese foreign trade; as a source of financial, technical and commercial expertise; and as an international point of entry and exit, These functions developed during the years of China's comparative isolation, Their importance may diminish in the longer term as China develops its own collaboration with the industrialised world and hence its own sources of foreign
In the short and medium term, however, Hong Kong will
Current
earnings. continue to feature large in Chinese economic planning. developments the campaign of friendliness towards the Hong Kong authorities, direct Chinese investment in Hong Kong, the encouragement of joint ventures between Chinese enterprises and Hong Kong firms, the improvement of transport links between Hong Kong and Guangdong Province, the new agreement on water supplies, and the agreement for China Light and Power (the body responsible for power supplies in Kowloon and the New Territories) to supply electricity to Guangdong are all consistent with a determination to extract maximum economic, financial and commercial benefit from the territory over a considerable
period.
7. We must nevertheless assume that the eventual Chinese aim is to end the British connection and reintegrate Hong Kong into China. Official Chinese statements conveniently devoid of a timescale offer no clue as to when or how this might happen. The Chine De line in private, and in briefing for left wing supporters in Hong Kong, is that the problem is one for the next generation or the one after that to solve. It is possible that the Chinese will provide some insights into their thinking during the visits to Peking by the Governor of Hong Kong and the Secretary of State. But it seems unlikely that they will be ready to look beyond, say, the next 10-15 years, or be willing to commit themselves to any particular timescale for an eventual settlement: they will
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