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magnet for discontented elements in the neighbouring provinces, particularly Kwang Tung, and a measure of the gap in living standards China still has to make up.
7. Nevertheless the great practical value of Hong Kong at present outweighs thesc nationalist and ideological considerations.
Of first importance is the Colony's value as a source of foreign exchange. Imports from China were about £600m in 1974, a rise of 6.3% over 1973. As a proportion of China's total foreign exchange earnings, however, earnings from Hong Kong on present trends will have declined from 40% annually in the decade prior to 1973 to 20.25% in 1980, as Chinese oil exports gather momentum. We know that earnings from Hong Kong are specifically mentioned as a factor in the Chinese five year plan now beginning and we can assume that they will continue to be significant up to and beyond 1990. Hong Kong is also of value to China as an entrepôt centre for Chinese foreign trade; as a centre of financial and technical expertise servicing Chinese trade in invisibles; as an international point of exit and entry; as an observation post on the outside world, particularly in the Far East and particularly Taiwan; and as a centre for subversive activities including propaganda.
III. External Relations
8.
The principal factor in Hong Kong's external affairs is, of course, the Chinese attitude which was publicly defined by the Chinese Permanent Representative to the United Nations in a letter to the Chairman of the Committee of 24 dated 8 March 1972:
"As is known to all, the questions of Hong Kong and Macao belong to the category of questions resulting from the series of unequal treaties left over by history, treaties which the imperialists imposed on China. Hong Kong and Macao are part of Chinese territory occupied by the British and Portuguese authorities. The settlement of the questions of Hong Kong and Macao is entirely within China's sovereign
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