CONFIDENTIAL
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That responsibility grew much larger after 1949.
With the Communist Party in power in Peking, Hong Kong and China moved, politically and economically, in diametrically opposite directions. The systems of government, law, economy and everything else grew rapidly wider apart. Enlightened capitalism in Hong Kong faced Chinese socialism across the border. China went through a fundamental change of social and economic structure accompanied by political upheavals. With intervals of severe turbulence Hong Kong prospered and grew as the result of stable administration and the energy and ingenuity of its Hong Kong Chinese population. Its population was substantially increased by immigration from China. From the modest trading port it has now become a modern city of over 5 million people, with an internationally oriented economy encompassing a major light industrial centre, one of the world's foremost financial centres and the world's third most active container port.
6. For their part the People's Republic were surprisingly acquiescent in the continued British administration of Hong Kong. In 1949 their forces swept down from the North engulfing the whole of mainland China. To the evident relief of the Hong Kong garrison they stopped at the border. A year later Chinese forces and the UK element of the United Nations forces were locked in combat in Korea and Hong Kong was instructed to observe the United Nations' embargo on trade with China. Again the Chinese failed to move against Hong Kong.
7. In 1967, at the height of the Cultural Revolution, there was nearly a year of rioting by Red Guard supporters in Hong Kong and relations between China and the United Kingdom were worse than at any period since the Boxer Rebellion of 1900. Once again, the Chinese did not seek to recover Hong Kong: they ensured that essential supplies of water and fresh food
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