TNAG-1173-FCO40-1465-Future-of-Hong-Kong-special-study-by-FCO-for-the-Prime-Minis-1982 — Page 103

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of it unlawfully.

A much stronger card is the crucial rôle

which the British connection plays in the stability and

prosperity of the territory. Without the continuity and

predictability of administration, law and tax structures

and the independent convertible currency guaranteed by British

control Hong Kong would not have developed as a major trading

force and the world's third largest financial centre.

Against the background of recent Chinese history it is very

difficult to see how domestic and international confidence

could be maintained if British administration ceased, however

extensive the autonomy given to Hong Kong within the PRC.

Moreover, the fact that Hong Kong is a British dependency

also enables Hong Kong to benefit from a number of treaties

and commercial agreements made by the United Kingdom.

16. The PRC have a very strong position. They could seize

Hong Kong by force at any time. They provide most of the

territory's food and much of its water. 98% of the population

are Chinese. There are substantial groups in the colony that

owe allegiance to the People's Republic of China; with support

from Peking they could create serious problems for the

administration of the territory and the maintenance of law

and order should they wish to do so. The disturbances in

1967 gave plenty of evidence of the damage that can be done

from hostile mobs manipulated from over the border. Even a

hint of a shift in Chinese policy in this direction could be

sufficient to bring about a slide in confidence.

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/17.