TNAG-2590-FCO40-3778-Internal-security-in-Hong-Kong-1992 — Page 8

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The Domestic Threat

17.

We believe the

economy to be the major

Territory's stability.

retrenchment or collapse

continuing success of Hong Kong's

factor behind the maintenance of the

A period of severe domestic economic

which had a seriously detrimental

effect on the personal livelihood or wealth of a significant

number of Hong Kong people could create a climate of instability

capable of fostering public disorder.

A slump of such

proportions could be brought about by:

(a)

a breakdown in the Chinese economy, in particular

any serious setback in Guangdong (this could also

produce intense illegal immigration pressure at

the border);

(b)

protectionist

action against Hong Kong or China

by their economic partners, for instance

withdrawal of China's MFN status;

the

(c)

a

major change in China's economic or foreign

policy leading to her isolation;

(d)

a worldwide recession;

18.

(e) a loss of trade competitiveness caused by, for

inflationary

example,

pressure, inadequate

reinvestment or

a COCOM "squeeze" on high

technology supplies to Hong Kong.

Within such

a climate, a strong adverse public

response to any of the following developments could pose a major

internal security threat:

(a)

large-scale

disagreement between China and Britain

leading to the abandonment of the Joint Declaration;

G.F. 316

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