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TITLE: EFFECT
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RELATION I
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UNITED KINGORM
ANO
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·
Mr.
CONFIDENTIAL
Reference.....
FEH 2/1
17
As we agreed sometime ago, I floated with Mr. Holmes, the Acting Colonial Secretary, and Sir J. Cowperthwaite, the Financial Secretary, the idea that it would be helpful to us in the FCO to have an authoritative statement of the value of Hong Kong to the United Kingdom. I put it to them that it would be helpful to us to have this in our discussions with other departments the Board of Trade and Mintech in particular. However, Sir J. Cowperthwaite took his usual line, viz: that it would be very difficult, if not impossible, to produce any satisfactory figures showing, for example, Hong Kong's Balance of Payments. But he did mention that he thought that over the last two years Hong Kong had contributed something like £120 million towards the UK's Balance, His latest view is that the leakage of sterling through Hong Kong might, in fact, be larger than he had previously thought.
2. In the circumstances I did not pursue the matter. We might have a word about this, but if we here are to try to do anything I am sure we shall have to be extremely careful to avoid wind of what we are up to getting back to Hong Kong.
16 September, 1970
10/
B. o. Laird) Hong Kong Department
MANZ
CONFIDENTIAL
.
.
+
fee (17)
CONFIDENTIAL
Reference...
Vr,
7
Mr. Stevenson's Nr. Morion SM 21.7 Mchaid
Hong Kon
I have prepared draft letters to send to the Bank of England and Board of Trade asking for contributions to the paper on the real value of Hong Kong to the United Kingdom. These drafts have been cleared at desk level with Mr. Tarlton (Economists Department) and Mr. Gaminara (Hong Kong Department). If you agree I will send them
off.
2. There is one point to which I think I should perhaps draw attention at this stage. Te and Hong Kong Department are already conscious of the uneasy state of relations between Whitehall and the Hong Kong Government. These difficulties have been compounded recently by the compli- cated issue of what will happen to Hong Kong if the United Kingdom decides to enter the Common Market. There is a risk therefore that if the Hong Kong Government get wind of this paper (which they probably will at some stage) without our having told them its purpose, they will react with alarm and suspicion. More precisely, they may gain the impression that the present paper is intended to show how much (or how little) the UK Government would lose in real terms if they decided to sacrifice Hong Kong to secure better all-round terms for the United Kingdom on entry to the REC. Of course, this is neither the inten- tion of the parer nor of British policy in general but the Hong Kong Government may not be entirely reassured.
-
3. This is not to say that the paper should not be written. The purpose of this minute is simply to draw attention to the possibility of a row with the Hong Kong Government if we do not take them into our confidence about the paper at a fairly early stage.
early stage. I suggest that once contributions have been collected from the Bank of England Board of Trade and Ministry of Defence (to whom Defence Department are writing) we should send a copy of the first draft to Hong Kong for comments together with a covering letter to reassure them about the scope and intentions of the paper. If Mr. Maddocks comes into the office again before he returns to Hong Kong we might brief him about the paper, especially since it was com- missioned originally as a result of his letter to Mr. Morgan about the dangers of bartering away our real interests in Hong Kong.
InAppleyard.
(L. V. Appleyard) 20 July, 1970
CONFIDENTIAL
NOTHING TO BE WRITTEN IN THIS MARGIN
TALE GONE PRODG'I 16651AC 'PO (180911)
Registry No.
YURITY CLASSIFICATION
Top Secret.
Secret,
Confidential.
Restricted. Unclassified
PRIVACY MARKING
¢༤
In Confidence
А.М.Т.Ру
DRAFT Letter
To:-
R. E. Clarke, Esq., CA 2 Division, Board of Trade, Shell Mex House.
HONG KON
Type 1 +
From
L. V. Appleyard
Telephone No. & Ext.
Department
It has become clear from discussions within the
Foreign and Commonwealth Office that we should prepare
an assessment of the economic at GÁZTATÁe value of
Hong Kong to this country, so that we are clear in our
own minds exactly what is our material stake in the
Colony. This will be of great value to us in the
context of Sino-British relations. We realise that the
relationship between the Colony and the United Kingdom
is complex, and that many of the factors are difficult
to quantify in precise terms. Nevertheless, even a
general estimate would be useful, and we are requesting
contributions from various Departments including the
Ministry of Defence and Bank of England.
2. In your case, we should be grateful for your best
estimate of the value to the United Kingdom of Hong
Kong's position as a major international airport, in
terms of a bargaining counter in negotiations about
air services between the UK and other countries,
air with an assessment of the value of UK
earnings derived from Hon. Kone's use as an airport;
and the amount of foreign exchange which we save by
having the Far East facilities provided by Hong Kong.
It may well be of course that in some respects the
position of Hong Kong brings disadvantages from the
UK viewpoint. If this is the case, this should be /pointed
pointed out. We realise too that to a large extent
Hong Kong operates as a separate entity in the airline
field.
3.
I should perhaps emphasise that this exercise is
not the prelude to a change in our policy towards Hong Kong. It is simply an attempt to strike a realistic
balance sheet for assessment purposes between the material benefits and disadvantages which the United
When we have Kingdom derives from the Colony.
collected all the contributions we shall re-circulate
the paper as a whole for further comment.
4. We donor purpose to refer this paper to the Hay King Govemment at this stage, to that we shared be grateful if no mention could be made
of the study
IA
any
HangKay Givemment.
communication with the
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C
(118340) DM. 391399 1,500 2/0 Av.
NOTHING TO BE WRITTEN IN THIS MARGIN
Registry No.
JURITY CLASSIFICATION
Top Secret.
Secret.
Confidential.
Restricted, Unclassified,
PRIVACY MARKING
..........In Confidence
DRAFT Letter
To:-
W. J. Hawkins, Esq., Economic Intelligence
Department,
Bank of England,
Type 1 +
From
L. V. Appleyard
Telephone No. & Ext,
Department
HONG KONG
It has become clear from discussions within the
Foreign and Commonwealth Office that we should prepare
an assessment of the economic angretapie value of
Hong Kong to this country, so that we are clear in our
own minds exactly what is our material stake in the
Colony. This will be of great value in the context of
Sino-British relations. We realise that the relation-
ship between the Colony and the United Kingdom is
complex, and that many of the factors are difficult to
quentify in precise terms. Nevertheless, even a
general estimate would be useful, and we are requesting
contributions from various Departments including the
Ministry
Pende and we Board of Trade.
2. In your case, we should be grateful for a
contribution on
(a) the present balance of payments position
between Hong Kong and the UK, and likely
future trends;
(b). the value of invisible earnings accruing
(c)
to the UK from Hong Kong;
the size of the Hong Kong sterling balances
in the UK and their value to the UK
economy;
(a) the place of Hong Kong in the Sterling (8)
/Area
(e)
Area structure;
the importance of Hong Kong in the gold
trade;
(f) any other aspects of the UK/Hong Kong
economic and financial relationship which
you consider relevant.
3. In some instances of course it may well be that
Hong Kong derives more from the relationship than we
do, and that we are inhibited from economic action
beneficial to the UK for fear of damaging Hong Kong's
position.
If this is the case, this should be pointed
out. I should emphasise that this exercise is not the
prelude to a change in our policy towards Hong Kong.
It is simply an attempt to strike a realistic balance
sheet for assessment purposes between the material
benefits and disadvantages which the United Kingdom
derives from the Colony. When we have collected all the
contributions we shall re-circulate the paper as a
whole for further comment.
4 We donor propose to refer the paper to the
прое
Haykay Gavomment at this stage, to that Надкая
we shared be grateful if no mentean cared be
made of
The study in any communication with
The Hangsang Gavemment.
NOTHING TO BE WRITTEN IN THIS MARGIN
(1291) D4. 391999
1,500M 249 Rw.
NOTHING TO BE WRITTEN IN THIS MARGIN
Registry No.
JURITY CLASSIFICATION
Top Secret.
Secret.
Confidential. Restricted.
Unclassified.
PRIVACY MARKING
DRAFT Letter
To:-
K. Price, Esq., Board of Trade, 1 Victoria Street, London, S.W.1.
Type 1 +
From
L. V. Appleyard
Telephone No. & Ext.
Department
In Confidence
HONG KON
It has become clear from discussions within the
Foreign and Commonwealth Office that we should prepare
an assessment of the economic and atmaterie value of
Hong Kong to this country, so that we are clear in our
own minds exactly what is our material stake in the
Colony. This will be of great value in the context of
Sino-British relations. We realise that the relation-
ship between the Colony and the United Kingdom is
complex, and that many of the factors are difficult to
quantify in precise terms. Nevertheless, even a
general estimate would be useful, and we are requesting
contributions from various Departments including the
2.
Deience and the Bank of England.
In your case we should be grateful for a
contribution on
(a) the present balance of trade between Hong
Kong and the UK and future prospects:
(b)
the extent of British investment in Hong
Kong including investment by banks;
(c) the extent of American investment in the
(a)
Colony;
the size of Hong Kong-based investment in
this country which woula pa alswthure if
thể Colony did not exiOG:
/(e)
(e) the importance of Hong Kong as a regional
centre for British trade;
(f) the usefulness of the Colony as a pressure
group for liberalising international trade
(g)
and investment;
a brief outline assessment of the advantages
and disadvantages of Hong Kong in terms of
our negotiating position for the entry b
the REC.
3. I should perhaps emphasise that this exercise is
not the prelude to a change in our policy towards Hong
Kong. It is simply an attempt to strike a realistic
balance sheet for assessment purposes between material
benefits and disadvantages which the UK derives from
Hong Kong, together with an estimate of our real
interests and investments there. When
When we have collec-
ted all the contributions we shall re-circulate the
paper as a whole for further comment.
4. We donor propose to refer the paper to the Hangkay kvemment arithis stage, to that we samed be grateful of no mentan could be
made to the study in any communication with the Hays Cary swemment.
HaysCarya
NOTHING TO BE WRITTEN IN THIS MARGIN
CONFIDENTIAL
Reference
15
Mr. Applevard (F.E.D.)
Economic Importance of Hong Kong
Further to our recent discussion I have asked Statistics Department to help with supplying figures relating to Britain's visible and invisible trade with Hong Kong. In connection with your present study you may also be interested to read the attached editorial comment "Hong Kong's Contribution to Stability of Sterling" extracted from the Far Eastern Economic Review of 5 March 1970.
B. Alacan
(B. A. Tarlton) Economista Department
14 July, 1970
CONFIDENTIAL
/the
Extract from the Far Eastern Egonomia Review of 5.3.70
"HONGKONG'S CONTRIBUTION TO STABILITY OF STERLING
A STRIKING feature of the Hongkong budget was the revelation of how much the colony is doing to prop up sterling- Under the Basle Agreement which guarantees Hongkong against losses on its hold- ings in London caused by any devaluation of the pound, the colony is unable to diversify its assets into other foreign currencies. But Hongkong has gone mich further than the letter of the Basle Agreement in actually raising very substantially its investments in Britain. The financial secretary announced in last week's budget that £19 million
virtually the whole of the surplus on last year's budget - would be reaitted to London, This was not a patriotic gesture on the colonial government's part, but a hard-headed nove to take advantage of the high interest rates prevailing in Britain.
In previous years, the practice has been to leave budget sur- pluses in local banks where they are wailable for fuelling the expan- sion of the Hongkong soonomy. However, as the financial secretary explained, bank deposits in the colony are now so high that the banks are forced to keep large liquid balances in London which reprosent the money for which they cannot find a use locally. Under the ofroumstar the goverment would clearly have been foolish to put any more funda into the local banking system at this point of time.
The financial secretary also revealed the extent to which Hongkong has expanded its sterling holdings over the last years. The increase, representing mainly the assets of the government and the non- mercial banks, has gone up by £103 million over this period. Hongkong is thus probably the biggest contributor to the stability of sterling area's foreign reserves, and the suas reaitted to Britain by the colony since the pound's devaluation represent help on a massive scale for Britain's exchange position. Not surprisingly, the financial scoretary felt it proper to lash out at the British government for its moan038 towards the colony in failing to give any formal reply to requests for help with building an £8 million extension to the airport which is used, as the financial seorstary said, by London to protect its OND aviation interests against those of the colony."
Your R
Mr. Gaminara
Thank
With the Compliments of
H. A. Copeman
you
ビ
9
Treasury Chambers Great George Street London, S.W.1
Prepared in the Treasury
14
OSSIBLE ECONOMIC SPCT O V.K. OP
DISTUMANITIS IN HONG KONG
A.l fi ur s in dillio::
Political baskasound
ve my no
Thin note is written against ":: conclusion in the Special Assessment in JIC(67)(SA)39 date! 18th May 1967, #ich concludes
that there is a potentially fan (erous situïtien in /
longer be able to rely on the Chiasse continuing t
status quo for oosno:.ic reason", but that it is th: Hong Kong Governmont will be able to vile out tha crisia without
Political "dan ..■" are being any major change in the status quo.
L
∙ccept the
11 occible that
nade and there is a grave zink that the Cainesc Govirmont and the local pro-commnietc will siek to force the long ng Government to
capitulate to these om inda",
U.K. tzale
V.K. ez;orts were 65 in 1960.
Prospects have been goo?,
an! in'oe: the lovol has ri on from 41 in 1960. Aports cover a wile range, including a good deal of nao inery ni transport equip-
ment and other actal gools. To think that one proportion goes on
to other market · through Tong Kong, but that not ach nơa poes on
to China.
Thi
fnolula! 30
U.K. importa in 196 ́ were £1 c.l.f..
clothing an: 18 textiles. The textiler com un er the epool-1
arcuumta limiting imports fre. in'ivi v-1
Th: worst situ:tion for
117007.
U., bal mec of in won'g voul!
be if the China-> wore nole to prohibit all U., az or
+
conic 110% of the colony continuin
thair no.e worl! wile an t
+
leas two "nounts
what we coul
but
1.
I
to dell
1-
15 0: ortz
Kollárast in
t in t
keto ith rt.
1
suppllei through lion Kon and that re coul' a:'' in other worli
wile marketn. Clearly a lot of the exports *N
ifficult to
of
יל-
ch.
1
!
2 *oul! lo
-
itic? ma" ar, men
our injorts from on
1* **** *es botnly ato
12.
0.7 0.
+
*** leul mi
.:. LI:
t textilen.
7:
in ios cosunt,
1:-
t th
of forcin
a to co
·
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= of :canc.is
io tra i
› be small,
Sut
in Jom, note micht ri:.
11 12
tatia
Chinn
att
לח
0...
ti: t
J
*..
1 Men', in selling our exports.
neo ing with the bilatuunt run 1
:
i ixration-1 Trou cu roiat
.
5 Ton; Con ̈*
mob possibly
1
in
་་་
**
t in . ' Al arts t
Th 2. 12 Y 1 - Thr
-
ouition
1 57 N : currency in varioz eral
: 0,
aficit
>i
mg 1- @norma
de, a sit-
w from Ton · "on
air
-
24
1
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>
+
onition
1
+
1
3.
a entre for malkin. (rit' in a
Tone Mon
toll of
#i: L
AM
C
to rozli
Chian often mu throu, "an; on merchant
e Sorur: Si 1+ on affectiv: than tryin; to
L
+
on: 1 c "ori. ́irect.
1 full note on this be "movie vilue of Ton Ton; to Chins
:
by mini.tw; of Batince na lo attrah.d.
H
H
■
balme
min c of jo. Mtu na! !ivilon's are ec:parative?:
vor donci.u
1. to my out more in intarsit en sterling
fact in tuis nran am. cubi.ot to
2.1. direct lavy-t...int zy be
10.oubt;
I'm -1.1 462 ortfolio inmarthent ahous tha anjo Zi uzs,
makin
0311- total of 80. A
00: Tont of the loc:1
lalu t In los oms
10
2th: Anazoial
al
comi inetit. ́ions that might be oz setel is in the hands
on'. Some of tha 51; fim. are non rogistare.
se hơi
in Hon on, the hon on ollic 15 bain formally of suboridasta
མཥ༣༤、,。
The on arm of there unterri
·ri
ILA M
to li 1. Ton 'C.. or
01***
17.0
Na in tha *,, in now
Tra H China
maddistinti, suvave no itin khu athenin 1 adopt?,
I
al ort: to -in-
iht also be r
W
in 10
I.
34.
:
*~ 32
i
sight all lo if exports were cut off sincs the capital
pes.* * * mana md ht be tirilt to "ell ..
f: ort.
not
*1**: - be bou hit in other countri's or
The
nco o islocation
The act ofret on the bil sew of
ig mila`l., om tit. 1033
+
in .1.' ..
in valtion to
A
tena our
with Ton" out.
/Distribution
I
HONG KONG TRADE AND PAYKNITS
£ million
(approximate)
1966
From: V.L.
Q&A
Ching
Other
Total
60
60
160
300
500
70
80
nagl.
320
470
+10
+ 20
-160
+ 20
- 110
Importa
Exports and re-exports
Trite balancɔ
Invisibles:
Touris
I
U.K. forces
+10
Earnings on Ebalances
+15
Other 1.F...
-10
Other (incomplete)
5
+10
Long-term capital
Total
Errors and emissions
Ingresso (+) in monetary
holdin s, of Thich:
sterling
70
+
10
15
10
5
70
20
20
+ 110
90
+
55
35
other currencies
fetal sterling hollings' end-1966, £322 million not,(and-March 1967
dollar holdings en:-1966 £51 million
£236 million)
19/9/67
Diet -ibution:
Kr. Edwar o
Urc. Connolly
Siz Alae Calimero-s
Hr. Figure o
Hr. back
fir. Raphael
Ur. hekay Mr. Ravlinson
Mr. Ryrie
Kr. iht
Hår. Annan.
Kr. Innno
Kr. Spen 1er
Mr. Horton
Nr. Mhillips
tecn
77: Hankins
Für. Darlin, toa
Mr. Forsey 702003
Kro. Horbun
Hr. Harr
Mr. Thalay
群:
Lr. Dennon
Mr. Hildyan!
}
TrecJury
Bank of M-223:
Ministry of Tefancl
..1..
Je Convenith 3241 3
Foreign offic
Hell. Tronrary
10th H2", 1967
E
SECRET
A Note on the Economic Value of Hong Kong to China
1. Under normal circumstances economic considerations would weigh heavily against Chinese interference in Hong Kong's present status. From the Colony China obtains a large annual trade surplus, most of the remittances contributed by Overseas Chinese, and the important benefits from Hong Kong's entrepot role. The following paragraphs set out the chief facts about China's economic relations with Hong Kong.
Trade with and through Hong Kong
2.
Chinese exports to the Colony in recent years have accounted for over nine-tenths of the annual two-way trade, giving Peking a large surplus (in Hong Kong dollars) ranging from the equivalent of £58 million in 1961 to £168.7 million in 1966:-
Chinese exports to Hong Kong*
Hong Kong exports to China Hong Kong re-exports to China China's trade surplus
1961 1962 1963 1964 1965 1966
(£ million)
64.5 76.2 92.5
0.5 0.5 0.5
5.7 4.8 3.9 58.3 70.9 88.1
123.1 145.0 173.1
0.8 1.1 0.96
2.9 3.4 3.4 119.4 140.5 168.7
(a more detailed table showing the composition of trade is given at
Annex).
This surplus, which is regularly converted into sterling, has played a major role in financing Chinese trade deficits with other areas of the Free World with the industrial countries of Western Europe in 1959-60 and again in 1965-66 and with Canada, Australia and other major grain exporters to China.
-
3. The Colony depends largely on China for supplies of fresh fruit and vegetables, meat, dairy products and oilseeds, and to a lesser extent, for the main staple foodstuffs such as rice, wheat and sugar. Although large amounts of rice are imported from China the principal sources of supply are the South East Asian countries. There is also a considerable market for Chinese textiles, simple machinery and other manufactured goods.
4. From 1962 to 1965 Chinese exports to Hong Kong increased at an average annual rate of 24%. This may be regarded as a period of exceptional growth, during which China was not only benefiting from the long-term expansion of the Hong Kong economy and population, but regaining a market largely lost in the difficult years of 1960-62. Signs of a levelling off appeared in 1965-66, and in the 12 month period July 1965 to June 1966, Chinese exports showed an increase of only 4.2% over the previous 12 month period.
This may
/have
*(1) Total Chinese receipts from exports to Hong Kong are probably
somewhat higher than shown in the HK Government statistics, since valuation takes place when the goods first enter the Colony, and therefore excludes the profit margins of Chinese trading corporations operating in Hong Kong.
(2) Re-exports of goods obtained from China (see para. 5) are
recorded as importa from China both by HK and by the country eventually receiving them.
SECRET
have been due largely to the levelling off of the economic boom in the Colony and the consequent lower increase in demand. Shortages of supply (reportedly in evidence at the Canton Fair in April 1966) may also have played a part. The third and fourth quarters showed a sufficiently large recovery to lift the total figure of Chinese exports to £173.1 million, an increase of 19% over 1965.
A part of this increase must be attributed to a change in Hong Kong Fegulations which have increased the coverage of trade statistics. Compared with 1965 recorded figures for 1966 may over state the growth by about 5%.ecorded
Ünder normal circumstances Hong Kong's consumption requirements could be expected to continue to grow, but further Chinese successes would probably turn increasingly on the quality and diversity of their exports.
5. Entrepot trade. The figures show that Hong Kong's domestic exports to China are negligible, and that most of the items sold originate elsewhere. Such re-exporta include chemicals, base metals, textile fibres, and animal and vegetable materials. Their value + however, is ateadily decreasing, as China ships more and more goods. from the original supplying countries. The value of Hong Kong's re-exporta of goods obtained from China is not published, but from information supplied by the political advisor's office is believed to have been about £34 million (about 20%) last year (1966). Goods thus re-exported include Chinese food specialities, textiles, animal by-products and medicines; and are sent mostly to South East Asia, Japan and Europe. It is evident that the Chinese still find it convenient to use Hong Kong and its variety of services for shipping many of their exports. Their own trading organisations, moreover, are not nearly so well equipped as Hong Kong merchants to handle a variety of small orders from overseas markets. Never- theless, as time goes on, the Chinese may be expected to improve their own facilities, and rely correspondingly less on those of Hong Kong.
6. Commercial liaison. Hong Kong is in addition a useful trading outpost for China, especially as regarde commercial dealings with countries with whom Peking does not have diplomatic relations, Preliminary negotiations for grain deals with Australia and Canada have often taken place in Hong Kong. Western firms, too, can readily make contact with Chinese commercial organisations in the Colony.
Overseas remittances
7. Most of the remittances from Overseas Chinese to the mainland are channelled through communist-controlled banks in Hong Kong. Up to 1958 they averaged about £25 million yearly, but subsequently there was a prolonged decline, largely because of unfavourable reaction among Overseas Chinese to the introduction of communes. This was accentuated by the tendency of people abroad to send food parcele instead of cash at the time when the Chinese food situation was at its worst although it temporarily increased foreign exchange receipts from parcel duties and other charges. Cash remittances in 1961 and 1962 were probably down to £15 million, but have
subsequently recovered, reaching an estimated £30-35 million last year. This range is perhaps unlikely to be significantly excéeded; Indeed as a result of the cultural revolution and events in China, Femittances declined in 1966 totalling an estimated £23-28 million for the year.7 Investments by Hong Kong Chinese in the Overseas Chinese Investment Companies in China probably amount to £1-2 million a year.
Other Invisible Earnings. Expenditures and Economic Advantages
8. The main Chinese invisible expenditures in Hong Kong are for services rendered by the latter in the fields of shipping, ship
/repairs,
SECRET
repairs, insurance and marketing.
These are gradually falling as China improves her own port facilities, and extends her direct trading links with other countries. Invisible earnings are derived mainly from the operations of Chinese financial and commercial enterprises in Hong Kong; from the annual sale of £1-11⁄2 million worth
Such of water to the Colony; and from a growing tourist trade. receipts are not, however, large compared with those from trade and remittances. Deposits received by the 11 communist controlled banks in Hong Kong are lent to their head offices in China, but the aume involved are subject to recall at very short notice In June 1956 the figure involved was about £3 million/.
Conclusion
9.
It is estimated that China's net annual foreign exchange receipts from the above sources averaged some 280 million in the years 1960-62, £120-130 million in 1963-64, £170-180 million in 1965, and £200-210 million in 1966 (over a third of China's total earnings of foreign exchange). Such a rapid rate of increase is in any case unlikely to be maintained, and from now on Hong Kong's relative importance as a source of foreign exchange may even gradually decline. However, it could remain the largest single source of earnings for some years to come, and continue to perform a valuable role in developing China's commercial relations with the Free World.
D.E.I.(DIS)
LEVEL AND COMMODITY COMPOSITION OF CHINA'S TRADE WITH HONG KONG
ANNEX
(£ millions)
Commodity Toup
Chinese exports to H.K. 1961 1962 1963 1964 1965
H.K, exports to China 1961 1962 1963 1964 1965
H.K. re-exports to China 1961 1962 1963 1964 1965
Foodstuffa, beverages
and tobacco
27.3 37.2 45.4 63.9 72.5
I
Crude materiala
7.5 6.8 6.9
6.0
Chemicals
1.3 1.4 1.6
2.1
8.2 0.1 0.1 0.1 0.1 0.1
2.6
0.1
0.6 0.5 0.1 0.1 0.1
1.0 1.4 0.8 1.2
0.9
2.4 1.6 2.0
0.2
0.3
Textiles, machinery and
other manufactured
goods
28.2
Other
0.2
30.6 38.4
0.2
0.2
50.8
0.3
61.4 0.3 0.3
0.3
0.4
0.7 0.9
1.7
1.3
1.0 1.4
2.1
Total
64.5 76.2 76.2
92.5
92.5 123.1 145.0 0.5
0.5
0.5
0.8
1.1
5.7
4.8 3.9 2.9
3.4
CYPHER/CAT A
TOP COPY (13
CONFIDENTIALR?
RI
TO PEKING
ROUTINE FOREIGN AND COMMONWEALTH OFFICE
TELEGRAM NUMBER 336
CONFIDENTIAL.
17 SEPTEMBER 1979
(FE)
FEH 2/1
ADDRESSED TO PEKING TELEGRAM NUMBER 306 OF 17 SEPTEMBER REPEATED
FOR INFORMATION TO HONG KONG.
YOUR TELEGRAM NO. 537 AND HONG KONG TELEGRAM NO. 616.
FOLLOWING FROM PARLIAMENTARY UNDER-SECRETARY,
MANY THANKS FOR YOUR ADVICE. WHILE I AGREE THAT WE COULD PROBABLY COURTER SPECULATION I THINK IT WOULD BE A PITY NEEDLESSLY TO RISK AROUSING IT GIVEN THAT YOU HAVE BEEN SO RECENTLY IN HONG KONG, MUCH AS I WOULD HAVE WELCOMED A TALK. I AGREE THAT IT WOULD BE BETTER TO PURSUE THE ALTERNATIVE OF VISITING THE COLONY AFTER YOU HAVE BEEN TO CANTON FAIR AND THIS IS AUTHORISED.
DOUGLAS-HOME
FILES
F.E.D.
H.K.D.
P.S. TO MR. ROYLE
SIR L.MONSON
MR. MILFORD
i
CONFIDENTIAL
<
4
NOTHING TO BE WRITTEN IN THIS MARGIN
Registry No.
DEPARTMENT
FE
FED
SECURITY CLASSIFICATION PRIORITY MARKINGS
* Date and time (G.M.T.) telegram should
reach addressee(s)
FILL I
77/9 1829
יו-וי
(Date)
Top Speret Sapris
Emergency
Confidential
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Priority
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En Hair Code
[
Security classification
if any
"CONFIDENTIAL
Cypher/
[Codeword-if any]
Draft Telegram to
Addressed to
PEKING
No....
(Date
PIKING
And to:-
306
17/9
telegram No.
(date)....
And 10...........
repeated for information to. HONG KONG
Saving to......
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Repeal to:-
HONG KI
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Saving to:-
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16
HI-H
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Your telegram No. 587 and Hong Kong telegras
No. 616.
Following from Parliamentary Under-Secretary.
Many thanks for your advice. While I agree
that we could probably counter speculation I think
it would be a pity needlessly to risk arousing it given that you have been so recently in Hong Kong,
much as I would have selconed a talk.
I agree
that it would be better to pursue the alternative
of visiting the Colony after you have been to
Canton Fair and this is authorised.
Files F.E.D.
H.K.D.
P.8. to
Mr. Royle
gir L. Monson W: Wilford
FEH 2/1
1700/1719
171
AR
13
-
CYPHER/CAT A PRIORITY PEKING
TELEGRAM NO. 587
CONFIDENTIAL.
CONFIDENTIAL
TO FOREIGN AND COMMONWEALTH OFFICE
14 SEPTEMBER 1970
TOP CO
ADDRESSED TO F C O TELEGRAM NUMBER 587 OF 14 SEPTEMBER R F I TO HONG KONG.
YOUR TELEGRAM NUMBER 301. [303 ?]
FOR WILFORD.
F 2/1
I RATHER DOUBT WHETHER IF I MADE A VISIT TO HONG KONG WHILE
MR ROYLE WAS THERE THE CHINESE WOULD PUT ON IT THE CONSTRUCTION
YOU SUGGEST, I HAVE AFTER ALL BEEN IN LONDON THIS SUMMER
AND WE HAVE HAD A VISIT HERE FROM ARTHUR MADDOCKS AND THERE
WILL BE ANOTHER BY JOHN MORGAN AT THE END OF THIS MONTH.
THE CHINESE WOULD PROBABLY REGARD IT AS QUITE NATURAL FOR ME
TO BE IN HONG KONG WITH MR ROYLE PARTICULARLY SINCE IT IS JUST
BEFORE THE OPENING OF THE CANTON FAIR. ANY SPECULATION
IS LIKELY TO BE IN THE HONG KONG PRESS TO WHICH SUITABLE GUIDANCE
COULD BE GIVEN. IF, HOWEVER, YOU OR THE GOVERNOR OF
HONG KONG HAVE ANY DOUBTS ABOUT THE ADVISABILITY
OF THE VISIT I WOULD, OF COURSE, NOT APT NOT WISH TO PRESS
FOR IT. IN THIS EVENT I HOPE THAT I COULD SPEND
A FEW DAYS IN HONG KONG AFTER MY VISIT TO CANTON AS
THERE ARE A NUMBER OF ADMINISTRATIVE MATTERS CONNECTED IN
PARTICULAR WITH THE NEW OFFICE AND THE RESIDENCE
WHICH I HAD INTENDED TO DISCUSS WITH THE MINISTRY OF PUBLIC
BUILDING AND WORKS ON RETURN FROM LEAVE BUT WHICH SHORTNESS OF
TIME PREVENTED.
MR. DENSON
FILES
F.E.D.
H.K.D.
P.S. TO MR. ROYLE
SIR L.NONSON
MR. WILFORD
+
pla
CONFIDENTIAL
H
CYPHER/CAT A
PRIORITY HONG KONG
TELEGRAM NUMBER 616
CONFIDENTIAL
ADD DOL
TO FOREIGN AND COMMONWEALTH OFF ICE
14 SEPTEMBER 1970
CONFIDENTIAL
ADDRESSED FCO TELNO 615 OF 14 SEPTEMBER RFI PEKING
FOR WILFORD
YOUR TELNO 323 TO PEKING
VISIT BY CHARGE D'AFFAIRES
For 41
WHILE THERE IS CERTAINLY SOME RISK OF UNDESIRABLE SPECULATION ON THE LINES YOU FEAR, SPECULATION IS BOUND TO ARISE FROM MR ROYLE'S VISIT IN ANY CASE AND I WOULD DOUBT WHETHER DENSON'S PRESENCE (SUBJECT TO HIS VIEWS) WOULD MAKE IT VERY MUCH WORSE. 2. THE QUESTION, I THINK, REALLY TURNS ON HOW IMPORTANT MR ROYLE FEELS IT TO BE TO SEE HIM HERE. IF IT IS IMPORTANT, WE
CAN WEAR THE RESULT.
(FCO PLEASE PASS PRIORITY PEKING)
P
SIR D.TRENCH
FILES
F.E.D.
H.K.D.
P.S. TO MR. ROYLE
SIR L.MONSON
MR. WILFORD
+
+
[REPEATED AS
REQUESTED)
4
1
'CONFIDENTIAL
Ple
D
CYPHER/CAT A,
CONFIDENTIAL
PRIORITY FOREIGN AND COMMONWEALTH OFFICE
RÂM NUMBER 363
CONFIDENTIAL.
peor
TO PEKING.
11 SEPTEMBER 1973. (FED)
FEAT 2/1
ADDRESSED TO PEKING TELEGRAM NUMBER 303 OF 11 SEPTEMBER AND TO HONG
KONG.
YOUR TELEGRAM NUMBER 578.
FOLLOWING FROM WILFORD.
&
I HAVE DISCUSSED THIS WITH MR. ROYLE. WE WOULD LIKE BOTH YOU AND
THE GOVERNOR TO RECONSIDER WHETHER IT IS WISE FOR YOU TO COME TO
HONG KONG DURING MR. ROYLE'S STAY. THIS IS THE FIRST OFFICIAL VISIT
WHICH MR. ROYLE HAS PAID TO THE COLONY AND HIS PURPOSE IS TO HAVE
DISCUSSIONS WITH THE GOVERNOR ON INTERNAL QUESTIONS.
INEVITABLY IF YOU ARE PRESENT AS WELL, EVEN IF ONLY FOR PART OF THE
VISIT, THERE WILL BE SPECULATION THAT ONE OF THE OBJECTIVES OF HIS
VISIT IS TO CONSIDER HONG KONG'S RELATIONS WITH CHINA, THE SITUATION
OF THE CONVICTED PRISONERS AND SO ON. IS THERE NOT A RISK THAT THIS
WILL LEAD TO EXPECTATION OF A MOVE ON THE PRISONERS
AND TO PEOPLE IN PEKING EXPECTING YOU TO RETURN WITH FRESH
INSTRUCTIONS?
1
2. IF ON FURTHER RECONSIDERATION BOTH YOU AND THE GOVERNOR THINK
WE ARE BEING UNNECESSARILY APPREHENSIVE, MR. ROYLE WOULD, OF COURSE
BE GLAD TO SEE YOU AND THE NECESSARY FINANCIAL AUTHORITY FOR YOUR
JOURNEY IS ASSURED.
DOUGLAS HOME
FILE S
F.E.D.
K.K.D.
P.S. TO MR. ROYLE
SİR 1. muRSON
MM. WILFORD
CONFIDENTIAL
10
YA
Registry No.
DEPARTMENT
SECURITY CLASSIFICATION PRIORITY MARKINGS
Emergency)•
Confidential Kertamed
Immediacej
Priority Kousine
• Date and time (G.M.T.) telegram should
roach addresscc(3)
12/9/
(Date)
Despatched
X
XXXRIX
Cypher
Draft Telegram 10:-,
No.....
(Date)
FRKING
And to:-
303
Security classification
tion]
-If any
[Codeword-if any]
Addressed to PEKING
HONG KONG
telegram No.
19
And to
CONFIDENTIAL
repeated for information to.. HONGN
(date)....
11 Sept
L
D
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NOTHING TO BE WRITTEN IN THIS MARGIN
12 $
Repeat fo:
ECO E0 A
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∙11.9
first.
Distribution:
F. Eiles
1HK Defe
P.SKM. Royle Sit. Memor
11/9/1/0
Copies to:-
Miliyas
EXAMINEEXI
Saving to:
.. LUI.
578
Your telegram No. 594.
Following from Wilford.
I have discussed this with Mr. Royle. We
would like both you and the Governor to
reconsider whether it is wise for you to come to
Hong Kong during Mr. Royle's stay.
This is the
first official visit which Mr. Royle has paid to
the Colony and his purpose is to have discussions
with the Governor on internal questions.
Inevitably if you are present as well, even if
only for part of the visit, there will be
speculation that one of the objectives of his visit
is to consider Hong Kong's relations with China,
the situation of the convicted prisoners and so on.
Is there not a risk that this will lead estime to
expectation of a move on the prisoners which Chr
matérsky diet people
expecting
in Peking
instructions?
espect you to return with fresh
/2.
CONFIDENTIAL
[
CONFIDENTIAL
2. If on further reconsideration both you and the Governor
think we are being unnecessarily apprehensive, Mr. Royle would,
of course, be glad to see you and the necessary financial
authority for your journey is assured.
है
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CONFIDENTIAL
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CONFIDENTIAL
Mr Royle
me.
M. Gyford
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agreed tal
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should consult the
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they dear 1/4
Please see Peking telegram No. 578 addressed by Mr. Denson to
There will be no difficulty in obtaining the necessary authority from the Administration for Mr. Denson to make this journey. However, before replying, I wonder if we ought not to think perhaps for a moment about the desirability of Mr. Denson being in Hong Kong at the same time as you are. On this occasion you wish to concentrate your activities on internal affairs in Hong Kong and this will no doubt be the gist of what you will say publicly on arrival and of any briefing you may give once in Hong Kong. If, however, Mr. Denson appears at the same time as you are in the Colony there is some danger at least that the press will say that his presence at the same time as yours means that matters connected with China, or possibly the release of convicted prisoners is under discussion. This would be a pity. I wonder therefore whether you would like to re-consider the question whether Mr. Denson should come to Hong Kong at the time he proposes.
2. A subsidiary argument but one which we should, I think, consider is that you will not have all that amount of time available in Hong Kong and you may not be able to spare much for extraneous matters. Mr. Denson has only just been through Hong Kong himself so I doubt if he is in need either of R. and R. or an excuse to do some shopping. I have mentioned this matter also to Sir L. Monson and you may like to add this to the agenda of the talk on Hong Kong which should have taken place today but which I understand may take place tomorrow.
Km Kun hiffo
(K.M. Wilford)
9 September. 1970
Tel sent
ツ
Muis
گے
CONFIDENTIAL
CONFIDENTIAL
TOP COPY
CYPHER/CAT A
PRIORITY PEKING
TELEGRAM NUMBER 578
TO FOREIGN AND COMMONWEALTH OFFICE
8 SEPTEMBER 1970
CONFIDENTIAL.
ADDRESSED TO F C O TELEGRAM NUMBER 578 OF 8 SEPTEMBER R F I
GOVERNOR HONG KONG.
FOR WILFORD.
FEET 2/1
L
WHEN I SAW MR. ROYLE IN LONDON HE SAID IT MIGHT BE USEFUL IF I
HAD A TALK WITH HIM WHILE HE WAS IN HONG KONG. I WOULD ACCORDINGLY
PROPOSE TO ARRIVE IN HONG KONG ON 11 OCTOBER AND LEAVE
FOR CANTON ON 14 OCTOBER IN TIME TO ATTEND OPENING OF CANTON
TRADE FAIR ON THE FOLLOWING DAY, GOVERNOR OF HONG KONG WITH WHOM
I HAVE DISCUSSED THESE PLANS SEES NO OBJECTION. GRATEFUL FOR
AUTHORITY FOR JOURNEY.
MR. DENSON.
FILES
F.E.D.
H.K.D.
PERS, OPS.D.
P.S. TO MR. ROYLE.
MR. WILFORD
CONFIDENTIAL
8
L
5
SA
CONFIDENTIAL
2877
Reference
Mr. Morgan,
Far eastern Department
Sino-British Relations
Mr. Maddocks has kindly sent me a copy of his letter to you of 12 June on Sino-British relations.
2. You will not be surprised to learn that I find it unconvincing, for reasons set out in part in my minute of 25 March to Mr. Murray (copy attached). I shall not add to that except to say:
3.
(a) Mr. Maddocks should give more thought to
the future: on the one hand the declining importance and increasing embarrassment) of Hong Kong; on the other the increasing importance of China.
(b) As for the present, if we are to take a
hard look at the Peking/Hong Kong/London triangle, let us not overlook Hong Kong. What does H.M.G. gain from Hong Kong' would be interesting to see a balance sheet.
If there are to be any general discussions on the future of Sino-British relations, I hope that Planning Staff will be given a chance to attend.
It
M
Handach
(P. Cradock) Planning Staff 3 July, 1970
Copy of submisini ₤37
sent to Me Carlock.
Mk
waish
SM
เจ
CONFIDENTIAL
SECRET
COVERING TOP SECRET
Flag A
SA
Mr. Wilford
Enter a resubmit pl. матиз
HONG KONG AND SINO-BRITISH RELATIONS
Mr. Maddocks will be in the Office on 6 and 7 July and
One of the
is booked provisionally to see you on 7 July.
subjects he will wish to discuss is the place of Hong Kong
within the broader context of Sino-British relations. In
anticipation of his discussions Mr. Maddocks has written
expressing considerable misgivings about what he sees as our
policy of bartering material interests in Hong Kong against
unreliable and ephemeral expressions of goodwill from the
Chinese.
2.
Mr. Maddocks' views appear to derive from a difference
of view on the basic aims of our policy. Since the comments
in Mr. Laddocks' letter underly some of the telegraphing from
Hong Kong (though in a more extreme form), it is important
that Mr. Haddocks should be reassured that we are under no
illusions about the extent to which Sino-British relations
can be improved, that we shall continue to pay due heed to
the substantial real interests in Hong Kong, and that our
policy is based on hard-headed calculation and not on wishful
thinking. Most of the points raised by Kr. Maddocks have
already been discussed at length, but I have some general
commenta on his letter.
Sino-British Relations
3. No-one here is under any illusions that in the foreseeable
future we can expect to
SECRET
COVERING TOP SECRET
/ China,
SECRET
COVERING TOF SECRET
4
given the present Chinese leadership and its likely
successors. There are too many deep-rooted obstacles:
history, competing ideologies, our close links with the United
States, our votes on the China seat in the United Nations and
our views on the status of Taiwan. These impediments will
persist even if the short-term problem of British subjects
is resolved.
The most we can aim for in the long term is a
sufficiently well founded
to ensure that temporary incidents (e.g. events in Hong Kong)
do not have a significant lasting effect on relations and are
dealt with in a reasonable fashion on the basis of our mutual
In the short term we can hope for an atmosphere,
interests.
in which problems like British subjects or potential disagreements
can be settled sensibly. In addition of course we want our
trade to continue to expand on a sound commercial basis without
discrimination against our traders on political grounds.
These are very limited objectives, based on a calculation of
the possibilities and, we consider, within our reach without
the sacrifice of real interests.
Commercial Relations
Li We should agree with much of what Er. Haddocks says in
paragraph 4 of his letter. We do not expect our trade with
China to outstrip our exports to markets in Europe or under-
developed countries. It will always be a small proportion of
overall British trade.
But the level of business continues to
Given that we are not
rise and the balance is in our favour,
bargaining away our interests elsewhere, and that the trade is
SECRET COVERING TOP SECRET
2
/ conducted
SECRET
COVERING TUF SECRET
conducted on a strictly commercial basis, there is every
reason to work for further improvement.
The Flace of Hong Kong
5. The crux of Kr. Maddocks' case is that we are too ready to
make concessions in Hong Kong in the search for a will-o'-the-
wisp improvement in Sino-British relations.
Flag B
6. T།
beyond any doubt that
TO APITTE- of "Hong
has shown
We can put
Similarly if an extension of the lease in
1997 is out of the question sooner or later, and possibly
long before 1997, we shall have to come to a settlement with
the Chinese over Hong Kong. This is bound to be painful.
The most we can hope for is an underly
on terms
consistent with our moral obligations to the inhabitants and
One unlikely to bring
pervane on this country.
This presupposes a considerable degree of Chinese restraint
and moderation.
term interests of Hong Kong itself that Sino-British and
It follows therefore that it is in the long-
Sino-Hong Kong relations should at least be sufficiently smooth
that we can enter into informal talks with the Chinese on this
problem with a reasonable chance of success.
7. In the short term it is scarcely necessary to re-emphasise
the need for satisfactory Sino-Hong Kong relations to preserve
the smooth running of the Colony. Accordingly we must
continually strike a delicate balance between maintaining con-
fidence in our determination and ability to preserve our
/position
SECRET COVERING TOP SECRET
3 -
SECRET
COVELLING TOP SECRET
position in the Colony, and the long and short-term
necessity to preserve sound relations between Hong Kong and
China. This means that while we should, and indeed do, pay
close attention t
Hong Kong by
showing that we are prepared wher▼ Hevesosiy
pressure, we should pay equal attention to removing irritants
in relations with China where this is possible. This entails
a hard look at the practical possibilities available to us, and
more particularly at the question of confrontation prisoners.
No purpose will be served simply by ignoring the problem, even
if the Chinese would allow us to do so. Given the oft-repeated
Chirme statement that
as much
relations.
we must at least continue to examine the problem
We may still conclude, as Mr. Maddocks suggests,
that there is little leeway for action; but this is no reason
for not taking up the issue, particularly as the local
Communists show no sign of wishing to resume ther campaign of
violence and the success of the Hong Kong Government in preserving
order becomes clearer and clearer with the passage of time. In
any case we cannot shelve the problem of confrontation prisoners
for four years, as Mr. Maddocke suggests, since we shall have to
decide during next year whether we wish to recommend the Governor
to
8.
A further point is that of timing.
relations with the Chinese are fleeting.
Moment of "good"
They are clearly
/ under
SECRET
COVERING TOP SECRET
-
SEORET COVERING TOP SECRET
under instructions to ensure that difficulties should not
be raised at present.
We should ensure that we are not
losing a good occasion for extracting benefits from them at
a lower cost than might be required at other times.
9. Mr. Maddocks touches briefly on the problem of maintaining
confidence between Whitehall and the Hong Kong Government.
This is one of the questions which Hong Kong Department
is keeping under constant review.
Copy to:
SALMorgen
(J. A. L. Morgan)
3 July, 1970
Clearly we have failed abyssually
Maddocks as the god Atte what
China is
that
Yr. Laird, Hong Kong Dept.
Mr. Cradock, Planning Staff
SECRET
+
стина м
our policy towwwt?
we have any but this most
COVERING TOP SECRET
5-
evil
Hong Kong. I find this very
Saud
نگا
Е до
but weshall have
Nying
Joubt if S
inpress.
sall matie aand
m M' Madducks Forrow.
(ictor)
did they boat. He
did not exclude the idea of
using the 'exemplary'
play of which he sawd 17x
had never thought.
Pl. Discus
OS. DA
2600077
10,000-3/70-874512
SCR.4/3571/68
CONFIDENTIAL
COLONIAL SECRETARIAT
LOWER ALBERT ROAD HONG KENE
SA
Dear John,
Sino/British Relations
12th June, 1970.
pla may
I
ба
EC
Thank you for your letter FEC.3/548/2 of 2 June. look forward to discussing this large subject with you in a fev veeks' time.
2. You will find that, having been here 2 years, I have become a strong advocate of the Hong Kong point of viev. find myself out of sympathy with the argument which starts from the assumption that the UK's political and economic relations with China are capable of substantial improvement and goes on to conclude that it is possible and wise to make some concessions in Hong Kong to achieve those purposes.
3. I find it difficult to take very seriously the prospects of a substantial improvement in political relations between UK and China. Our inheritance from the last century, the extraordinary dogmatic nature of the Chinese regime, the probable continuation of irritations and problems in Hong Kong and the relative decline of our pover in the world set narrow limits to the scope for improvement. The present discounted value of our political prospects in China seems to me to be almost zero. If we stay as we are, ve shall not do too badly.
4. The economic outlook seems hardly better. Although ve know very little about the Chinese economy, it seems likely that her rate of economic growth is very small indeed. Dramatic changes in the total volume of her external trade are not to be expected. The present volume of Ur/China trade is low in terms of the UK's trade. It is of importance to a number of firms and pressure groups, but it does not seem to me to make good commercial sense to concentrate much effort or hope on trade with China. The lesson ve have reluctantly learned in the '50s and '60s is that the industrialised countries of the world show the really dramatic increases in trade openings for Britain. We want to do our best in trading also with the
}
J.A.L.Morgan, Esq.,
F.C.O.
c.c. J. Allan, Esq., Peking.
P. Cradock, Esq., FCO.
CONFIDENTIAL
/under-developed
CS. 41A
2600077
18,000-3/70-374312
SCR.4/3571/62
CONFIDENTIAL
COLONIAL SECRETARIAT
LOWER ALBERT ROAD
HONG HONG
page 2.
under-developed world including China but the real pickings are not there.
5. Of course I accept that ve would be well advised to improve political and commercial relations with China if ve can. I am simply arguing that we ought to make a very cool, realistic judgement of the probabilities, especially if there is a price to be paid for the chance of obtaining these benefits.
On the other side of the equation I should like to emphasise the difficulties of making concessions in Hong Kong. First of all it is a matter of opinion whether making concessions is a sensible way to deal with the Peking Government. Secondly there is the particular question whether a concession can be made. If one looks towards the confrontation prisoners in Stanley and Laichikok the Hong Kong viev is that it cannot. The subject was examined ad nauseam during Grey's detention, There is nothing new to say. I think it would be best to accept that there is no possibility of a concession on that subject. Instead of minuting that the subject should be kept under review, etc, the file should be marked "BU 1974". The number of prisoners vill in the normal course of events have been reduced by then to single figures and it might be worth while looking at the subject afresh. But not in 1970 or 1971.
7.
In other words what ve might hope to get out of China more trade, release of British subjects, political influence, better treatment for our diplomatic mission seem to me very small objectives (or if big, have to be heavily discounted because they are unlikely to be gained) compared with the very substantial values we have at stake in Hong Kong, not only economic, but political, intelligence and human. I shall therefore argue that we ought to think more about Hong Kong and less about China (even that we should think more about improving relations with the Hong Kong Government than with the Peking Government!)
C
CONFIDENTIAL
/8. Because I am
2600077
CONFIDENTIAL
4CS. 41A
10,000-3/70-874512
SCR.4/3571/62
L
COLONIAL SECRETARIAT
LOWER ALBERT ROAD HOME KONG
page 3.
8. Because I am a member of the Diplomatic Service serving for the moment outside the Diplomatic Service I find myself repeating the classic criticism made in Whitehall of "the F.0.", which is that "the F.0." tended to be willing to sacrifice genuine British interests especially of a commercial or financial nature for the sake of smiles and insubstantial generalities.
Your ever,
Arthur.
(A.F.Maddocks)
CONFIDENTIAL
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Reference
Text 44
Kr Stevenson of the Far Eastern Department handed me the attached draft submission and asked me to clear it with you.
2. The subject of the submission is, as you know, а long-standing matter of discussion between the FCO and the Governor. You will recall that the Secretary of State was briefed to take the matter up with the Governor during his recent visit to the Colony. We do not know whether in fact he had any discussions with the Governor on the subject: maybe Mr Maddocks will be able to give us the answer to this and to give us an indication of the Governor's attitude if and when the question was raised.
3. I have a number of queries to raise on the draft and these are related in the main to paragraphs 5-7:
aftlagt
case, In/sts, in my fie. th. quetio
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(a) I think that the draft tends to ignore the Governor's own difficulties vis à vis both public opinion in Hong Kong and the attit- ude of his unofficial advisers It takes
a line formulated several thousand miles away from the scene of action and it over- simplifies the implications of the issue.
(b) I do not agree that "an extension of the
lease in 1997 seems to be out of the ques- tion".
I have always thought that the crux of the matter, when the time comes, will be the extent of the importance of Hong Kong to China. If that importance is sufficiently great, then I think that there is a reasonable chance on the lease being extended in one form or another.
(c)
(a)
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4.
(23 June. 1970)FED.
view
I doubt very much whether a gesture by Hong Kong at this time in accelerating the release of a number of confrontation prisoners would have much, if any, effect on the Chinese attitude towards Hong Kong in, say, 10 to 15 years' time.
Is it certain that the issue of the con- frontation prisonere is still a vital one, so far as the Chinese are concerned? In the brief prepared by the FED for Mr Denson's visit to London before Easter, some doubt was expressed as to how much weight the Chinese really did attach to this problem. There certainly appears to be no pressure from the Chinese at present for the premature release of
and from Hong Kong's point prisoners: of view at any rate, I would say that Sino/Hong Kong relations at the moment ́are certainly sufficiently satisfactory to "preserve the smooth running of the Colony",
2576
I understand that you will be present at the dis- cussions with Mr Maddocks and you may therefore prefer to express your views at the meeting, rather than attempt to agree the terms of the attached submission with the
(AL Gaminara)
C
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(K)
ų
Mr. Murray,
Far astern Department.
Prospects for Sino-British Relations
I am
Thank you for letting me see a copy of your paper on the Prospects for Sino/British Relations. interested not only in my present capacity, but in my former as Mr. Denson's predecessor.
2. The main theme of the paper is that any gestures to China in Hong Kong are
but that we should con- sider conciliatory gestures in other, e.g. commercial and cultural, fields. I think we must recognise that this is unlikely to produce any significant political change.
3.
(a) As the Chinese have repeated ad nausean, liong Kong is the crux. The link between British subjects and confrontation prisoners in Kong Kong, always implicit, has I believe recently once again become explicit. Unless we can produce at least a sign of movement in Hong Kong we must not expect any political change. Without this the Central Government will have no argument to use against the Shanghai authori- ties in order to procure releases and no great inducement to treat us as other European missions.
(b) Experience over the last few years suggests that the Chinese will simply pocket gestures in, e.g..., commercial and cultural fields, without changing their basic attitude.
The conclusion I draw from your paper is that Sino/ British relations are frozen, and we may have to accept that they will remain so. Í think this a great pity, since it may mean denying ourselves valuable political and commercial opportunities because of Hong Kong.
(a) On the political side, we must look at Sino/ British relations in the longer term in the context of the Sino/Soviet dispute. The best prediction we can make is that Sino-Soviet hostility will continue. In the light of this, the Chinese are likely to be increasingly interested in improving Western contacts and learning of political and military developments in Western Europe. They have shown an interest in the health of NATO and, while they may go through the motions of denouncing the E.E.C., they may also have an interest in its development. There is also our and Europe's long-term interest in improving contacts
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with China and assisting in her eventual emergence. The Soviet Union and the U.S. may be disqualified from doing so. There is, therefore, a potentially valuable political role we could play in Peking. Because of the Hong Kong problem we disqualify our- selves from doing so. If anyone, the French reap the benefits of acting as the European interlocutor of the Chinese.
The
(b) On the question of trade, while the present situation is "encouraging, it would probably be wrong to draw the conclusion that our trade will go on expanding regardless of the political climate. possibility is that before long it will reach a natural level and that any further increase will depend on political factors. Unless our policy changes, here again our European competitors will be better placed than we.
The points I should therefore like to see brought out in the paper are :
(a) Hong Kong remains the crux;
(b) That we should consider very carefully the possibility of at least small gestures in Hong Kong as a sign of movement in this critical field and of encouragement to the Chinese;
(c) That, failing this, we must recognise that we are unlikely to make real political progress and after a point may not make further commercial progress;
(d) That this will be unfortunate when China may be increasingly interested in improving West European contacts.
c.c.
Private Secretary
Mr. Baker
Mr. Wilford
Karadak
(P. Cradock) Planning Staff 25 March, 1970
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Mr. Carter (Hong Kong Dept.)
Mr May
Sino-British Relations
This is a somewhat depressing letter from Mr. Denson on the prospects of improving Sino-British relations and obtaining the release of the remaining nine British subjects detained. I would agree with him that the chances of their being released in the near future are bleak but it seems over-pessimistic to suggest that there will be no further releases
for some years.
2. I think that we would agree in Far Eastern Department that the premature release of at least some of the remaining Chinese prisoners in Hong Kong is
Government's ability to manage its affairs.
But we
are not going to convince the Hong Kong Government of this at the moment. However, it is not axiomatic
that the release of Chinese prisoners would lead to
the release of British prisoners. The Chinese have
never directly linked the nine with the remaining Chinese prisoners in Hong Kong. It is well to remember too that the Chinese are displeased with other aspects of our policy towards them and that their internal political scene is also a factor in their policy-making.
3. I so not see how we can avoid the danger that the Hong Kong Government may need to take strong action against local communists if they decided under instructions to court such a reaction. But all the
evidence at the moment is that this is unlikely.
The local communists are under instructions not to
provoke the Hong Kong Government. Mr. Denson perhaps puts his finger on our dilemma when he states that in the final analysis it is our position in Hong Kong which counts rather than improved relations with the
Chinese.
4. It is not entirely clear how much weight the Chinese attach to obtaining the release of the remaining prisoners in Hong Kong. In official exchanges they have only raised the issue twice in recent months and in both instances it is difficult to see how they could have avoided doing so (our representations in December on behalf of Mrs, Martin and Mr. McBain, and the Chinese protest about the
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death of a Chinese Trade Unionist in a Hong Kong prison). For the most part there is very little pressure in Hong Kong for the release of the prisoners and the Tang case was fairly quickly dropped from communist propaganda. In general communists in Hong Kong seen resigned to the fact that the confrontation prisoners will serve out their sentences.
5. In his analysis of recent developments in Sino- British relations I think that Kr. Denson perhaps exaggerates the extent to which they have deteriorated.
On the debit side a number of events are known to have
displeased the Chinese; a) our vigorous representations on behalf of Mrs. Martin and Mr. MoBain; b) the supplement on Taiwan in The Times; c) E.C.G.D. cover
for the construction of a power station by a British firm in Taiwan; and d) the dispute over the dumping
of Chinese alarm clocks on the British market. It is
true that there has been a general increase in the amount of space in the Chinese press given to anti-British reports. But the Americans have been similarly
attacked at the same time as the Chinese have regumed
contacts in Warsaw, It is possible to argue that the purpose of these articles was less an indication of Chinese displeasure than an attempt to demonstrate that we are a weak and insignificant power, racked by political and economic crises and therefore not presenting any significant threat to Chinese interests. This line of argument could well be used to justify Chinese inaction to their supporters in Hong Kong over the issue of confrontation prisoners. The articles are also part of the continuing Chinese attack on imperialist
powers.
6. As regards other signs of displeasure by the Chinese cited by Mr. Denson, I have seen no evidence that the Chinese are annoyed by the closure of the Reuters office. On the contrary they could have made difficulties for us but were in fact fairly helpful. We have seen no evidence either of the Chinese creating adzinistrative difficulties in other areas. A.MOFBW representative is now in Peking discussing the reconstruction of the Chancery building with the Chinese and these negotiations will no doubt provide some evidence of whether we can expect the Chinese to be helpful or not over this question. Since the
arrest of Mrs. Martin and Mr. McBain there has been no
further harassment of other British subjects in China.
/ On the
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On the contrary the Chinese have returned promptly some yachtsmen who strayed into Chinese waters around Hong Kong and our fears that a British businessman (Mr. Crowe) might be detained in Peking before Christmas were not realised. As regards the chances of British businessmen in Hong Kong attending the Spring Canton Trade Fair, the S.B.T.C. remain optimistic that the ban will be lifted on this
occasion.
There are no signs that the Chinese are discriminating against us commercially. On the contrary our commercial relations both here and in Peking are cordial.
7. The main act of discrimination has been the curtailment of travel by members of our Mission outside Peking. A comparison of the dates of our representations in December on behalf of British subjects and the dates when applications were first refused suggests that this was a direct act of retaliation signifying Chinese displeasure at the way in which we had deliberately raised the temperature. Mr. Denson also suggests that our recent publicity campaign about the treatment of Mrs. Martin and Mr. McBain would also have irritated the Chinese. fact this campaign was a flop and I doubt whether the Chinese would have noted any additional effort above the usual coverage given to this subject in the British press.
In
We are not aware that there has been any significant foreign news coverage. On the whole, therefore, my assessment of recent events is that relations remain as poor as ever but that it is difficult to argue that there has been a noticeable deterioration. The Chinese do not want to put the clock back but they seem to have no enthusiasm at the moment to move forward.
8.
Mr. Denson concludes with a number of recommen- dations for future policy.
(a) The chance of the Chinese agreeing to the
confrontation prisoners being "returned to China" is virtually nil? If we raised this with the Chinese again it would be largely for the benefit of relatives and possibly Parliament if we were prepared to announce publicly that we had done so. We would have to decide whether the offer should be made through "Contact" in Hong Kong or diplomatic channels. Timing would also be
* See Backgroma Wol
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Flig B._._._.
important if we hoped to attract a not entirely
unfavourable Chinese reaction. I doubt whether
the present moment is propitious when the Chinese are showing no particular interest in obtaining the release of the prisoners. It would be better to keep it up our sleeves until they return to the charge again as they undoubtedly will- at some future date.
(b) I agree that we should continue to stimulate
publicity but we must recognise that the British subjects are a less interesting item for the press now that Mr. Grey has been released. Our publicity campaign for the Martin and McBain cases was a flop. It is also worth considering whether we have reached the point of diminishing returns with the Chinese over negative publicity of this kind and should now concentrate on a more positive publicity line. In this connexion it is perhaps worth considering whether we should not stimulate articles which draw attention to our improved commercial relations, indicating at the same time our willingness to be helpful to the Chinese and hence evidence of our desire to improve Sino-British relations in general. This has its dangers I realise and could well provoke the opposite reaction in Britain from those who are keen to
impose sanctions on the Chinese. Nevertheless it
is the one area in which we are useful to the
Chinese and although one must not exaggerate the leverage which we obtain from this there would
seem no harm in the point being underlined in publicity.
It
(c) The letter from Mr. Maddocks (attached) on the
activities of the Board of Review is unhelpful. The Board's deliberations show no aign of any particular urgency to resolve this problem. sat only three times since July. On the last two occasions it failed to recommend any of the
prisoners in whom we are interested for release. The procedure seems inflexible and apart from supporting Mr. Denson's suggestion that offenders who have health problems might be considered for release I cannot see any way of getting round its rather rigid terms of reference. I should be grateful for Hong Kong Department's views on this. It is worth pointing out however, that the courts
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would now appear to be applying more lenient criteria in their judgment of offenders than was the case in 1967 (the head of the Gasworks Union) and it would be reasonable to argue that the Board of Review should take a similar relaxed view when examining these cases. There seems to be one inconsistency in Mr. Maddock's letter; paragraph 5 he reports that the cases of eleven young offenders were reviewed twice within the last year although prison rules allow only for annual review. Would it be possible, therefore, to have the long-term prisoners reviewed at less than the statutory interval of every two years? It would be useful if Hong Kong Department could remind us of the criteria used by the Board when considering remission of sentences,
It must have been clear from the paper prepared for the talks with the Governor in December and from our discussion with him that we had been irritated by the lack of consultation on cases which had come before the courte during the latter part of 1969. Rather than remind the Hong Kong Government "at every opportunity of this obligation" which might be counter productive, it would be better to confine it to occasions when we think that consultation might have been swifter, e.g. the recent case involving the arrest and sentencing of a former prisoner who had not observed his supervision order. In this instance it is not clear whether the delay in informing us was deliberate or due to administrative inefficiency.
We must conclude that apart from continuing to advise restraint on Hong Kong we are unlikely to persuade the Hong Kong Government to make concessions over the remaining Chinese prisoners substantial enough to evoke a response from the Chinese. Must our relations with the Chinese, therefore, remain in a state of suspense? Hr. Denson points out that the Chinese would probably like to improve relations with us as part of their policy of maintaining links with West European countries in the face of Soviet pressure.
The importance
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The importance to the Chinese of European countries as a source of supply has clearly increased during recent months. Hence the increased activity of the Chinese Commercial Office in London. It is partly true that
brobything the Chinese must realise that they can pocket the commercial benefits without making any political
concessions to us.
We must therefore not exaggerate Chinese dependence on U.K. suppliers or our leverage over them. Nevertheless commercial contact is the one laspect of our relations with the Chinese which remains fairly cordial and we should therefore build on this. I referred in paragraph 6(b) to the dangers of appearing too forthcoming to the Chinese in commercial matters, but this should not prevent us from continuing to be helpful and provide facilities in commercial matters in the hope that some of the goodwill generated by actions will rub off on our political relations.
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Gifsem
(C. Wilson)
13 February, 1970.
I agree with Mr. Wilson's assessment of the possibilities of improving Sino-British relations. It is clear that Sino-British trade is the only feasible area in which we can take significant positive steps to achieve better relations with China.
2.
I think it is important that we should realise the difficulties which an approach to the Chinese to release Hong Kong confrontation prisoners over the border would entail. This proposal has already been put to the Chinese at least once during the confrontation period. The Chinese rejected the suggestion out of hand and were obviously annoyed that we had suggested it in the first place. They clearly assumed that we would realise that the idea was completely unaccept- able, and seemed convinced that we were simply trying
If we were to resurrect [ker) to debat points off them.
debatingpoints this propisal at the present time the Chinese would be deeply annoyed, having made their views abundantly clear in the past. Moreover, discussions on the release of prisoners inside China would raise all the old long-term problems of Chinese sovereignty over Hong Kong as well as bringing up once again the con- tentious issues which occurred during the confrontation period.
3.
A geature such as the premature release of some
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prisoners in Hong Kong or even better, an amnesty, i would register with the Chinese and would be taken as a significant step on our part to improve relations. But a proposal to release prisoners inside China would, I am afraid, be only counter-productive,
Спермедал
(L. V. Appleyard) 13 February, 1970
These angul monter come taken into account.
in the preferative of and paper of
2th Round
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"The Refunds for Smo- Briksh Platine":
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Mr. C. 1вon, Wison,
Far Eastern Departhent
I am in general agreement with paragraphs 1-7 of your minute but have reservations on your view that we could without weakening confidence in Hong Kong do more in the way of premature release of confronta- tion prisoners. On this matter, my department will once more study the possibilities, taking up the points in paragraph 8(c) of your minute, and will comment separately.
2.
I agree with Mr. Appleyard on the question of releasing prisoners to China, For us to take the initiative in raising this again would, I feel sure, greatly exacerbate relations. Just conceivably it may be worth mentioning to them again if, as you suggest in paragraph 8(a) of your minute, the Chinese themselves give us the opportunity to do so. (3.1 consider that the Governor is fully aware of the need for caution and restraint in handling the local communists, and I would dispute that he showed no recognition of this in our discussions in November, as Mr. Denson would seem to suggest. The question of asking him to give an undertaking in these terms did not (and I hope will never) arise. Successive Governors have become skilled at treading the narrow path between firmness and avoidance of provocation, and I do not think that Sir David Trench is any less skilful or less discerning in plotting the right course. Difficulties arise because there must inevitably be differences of opinion as to where that course lies, Governors have tended (though not always) to veer towards firmness, with their gaze concentrated primarily on the problems of local administration, Our representatives in Peking, naturally preoccupied with the sady of Sino/British relations, are more 5 concerned to avoid provocation and indeed to see móði positive advance in our relations with China. Generally our role has been to reconcile and resolve differing views; on occasions, however, we have found ourselves holding quite distinct opinions of our own. It has been a role which, I suggest, Far Eastern and Hong Kong Departments have in concert 'played with some skill over the years, given the various personalities involved. Mr. Denson has himself, of course, been one of the dramatis personae at this end, Therefore we must in the forthcoming discussions with him pay particular attention to his evident sense of frustration as it emerges from this correspondence.
¿
March, 1970
(W. 8. Carter) Hong Kong Department
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BACKGROUND
مجھے آن ها
(r)
Deportation, to China.
A
1.In 1960 the physical deportati n of BRÍXRAKEX criminals from Hong Kong came to a complete halt, and the only category which the Chinese government was prefed to accept were those people arrested for esphonage activities on behalf of the C.P.G., and the last case in this category occurred in 1966. 3.However,with the commencement of Communist confrontati n in H.K. in 1967, and following arrests and subsequent recommendations by magistrates that prisoners should we consi- dered for deportation the C. B.G.made it clear through an anouncement txxx by LAUNG
ai Lan,director of the H.K. branch of the
KONA in a bulletin of June 15 that this weal
wold not be tolerated by the C.P.G as"it is the inviolable and inalienable right of the Chinese people to reside in Hong Kong." 3.On 14 March 1968 it was decided to make a test case of two communist ile stars,Shek maar Wai and Fu Ki who were presented for "re- lease to China" at Lowu on 14 March. The C.F. C.P.G. condemned this as a disguised
us as form of deportation, an. branded it as a "new form of persecution" and it became the aubject of an official protest to .K.. in Peking.
4.On 11 April 1968 it was suggested that a garage and H.k.G. would be prepared to allow certain prisoners in ..to go to China to reside. Lo Kuei-po described this proposal as a " disguised form of deportation" and said that the Chinese · Øvernment could not
་
possibly agree to this.
5.On 15 Muy a further approach was made to the NONA offering to release a person, at that time detained in the V.R.G. for Chinese -spionag: activities,on the understanding that the CIA would make arrangements for his return to China.After some delay the FORA denied all knowledge of the detainee concerned and stated tiut any attempt to deport him to China would be unacceptable. 6.On 30 August 1968 the Foreign Secretary, Kr.George Grown wrote to Ch'en Yi
k
this same point, with special reg rd to the possibility of the mutual deportation of Mr. Anthony Grey, the Reuters' correspondent, from China, and of sich P'ing, the communist ONA reporter from ong Kong. The Chinese Government
made no response.
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PERSONAL & CONTIENZIKE
Office of the British Chargé
à'Affaires,
Dear James,
Fully chanson withe 20 Janson.
Peking.
See and
parfer of 24 Maule.
27 January, 1970.
Rands
You had earlier said that you would be letting me have your viets on the state of Sino/British relatione following my interview with the Acting Read of the Western Luropean Department of the Foreign Ministry on 22 December, Since then there have been various developments and I thought that you might like my own assessment in the form of a consoli- dated paper, which I now enclose.
2. The picture which I paint is bleak, particularly as regards the prospects for the release of detained Eritish subjects. I hope that I am proved wrong, but I think that the unpleasant possibility of there being no further releases (except on health grounds) for some years must be faced. If, as . result of this, and of the lack of any progress towards the release of confrontation prisoners in Hong Kong, our political relations remain soured, it could have a depressing effect in other directions, including trade. But as you ill know from recommendations I have made se arately, I am certainly not "orking on this assum tion.
3. ly views about the need to co-ordinate all aspects of Sino/British relations and to regulate actions in Hong Kong accordingly are already on record and have been well reflected in the paper prepared by Far Eastern Department for the meeting with the Governor of Hong Kong on 25 November last (enclosed in your letter of 4 Ducumber). I share your hope that w shall be able to steer the Hong Kong Government away from injudicious policies. Thie at any rate should stop the position getting worse, though if the line on prisoners is maintained, I doubt if it will get much better. It is very difficult to argue from here against the view that any further remissions or releases would be damaging to confider.ce in the Colony and have the various other unfortunate effects which the Covernor claims. It is however a fact that everyone in Hong Kong does not share the Governor'a view. There are some who think that the Hong Kong Government is now in a position of such strength and the Chinese are so anxious not to rock the boat that the moment is propitious for some political gesture in the interests of relations with China as a
hole. They also share my view that the real danger lies in an incident or situation arising in which the Hong Kong authorities would be compelled to take stron, action, thus risking escalation. An unabrasive policy would minimise the risk, but the possibility of it happening spontaneously e.ɛ. an incident on the border or in a street market cannot be ruled out. In these circumstances, if a policy of gradual relaxation is not being followed, there will be no fund of local or Chinese Government tolerance and the restoration of order may accordingly becore more difficult without repressive measures. I dare say that these are some of the subjects which will come u for consideration when the appointment of the new Governor is made. The main purpose of my paper is to point to the probable consequ- ences of the continuation of the presert situation. I fully agree with
/the statement
James Kurray, Esq., C.K.G.,
Far Eastern Department,
F.C.O.
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the statement in paragraph 7 of Far Eastern Department's paper that Hong Kong is the "prime element" in Sino/British relations. In this case, we may be justified in sacrificing all other elements in order to maintain the position we want in Hong Kong, using the methods which the incumbent Governor considers appropriate. But we should be clear what this sacrifice may entail.
4. I have made certain recommendations of which (a) and (c) might be examined further, subject to your views. I should in any case be glad to know what you think of my general analysis and the prospects I fore- Bee for the future.
Yours
wis ever, Jou
(J. B. Denson)
·
PERJONAL & CO)
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Sino/British Relations
Present Position
After the release of Mr. Grey and five other British subjects in October, and even after te subsequent arrest of Kra. Kartin and Mr. McBain, the Chinese in contacts with us laid stress on the efforts they had made to improve relations and indicated that reciprocal measures were expected. Specific mention of confronta- tion prisoners in Hong Kong was not however made until 22 December when I pressed the Acting Director of the Test European Department very hard for information about rs. Martin and Mr. Kesain. Reference to prisoners was again made when Kr. T'ang protested to me on 5 January about the death of the Chairman of the Taikoo Dockworkers Trade Union, and asked that these prisoners should be released. The Chinese representations were in a low key and were clearly intended mainly to support representations by local communists in Hong Kong. I do not think the death will prove a decisive element in our relations, but the timing was unfortunate. It is clear however that the only measures which the Chinese have in mind are connected with confrontation prisoners. It is highly unlikely that they expect us to release a large number at once; what they are probably looking for is some movement which would enable them to justify to local communist sympathizers in Hong Kong further relaxations, including the release of detained British subjects. It is possible that some clements in the leadership, including Chou En-lai, are keener than others to see an end to confron- tation problems in the interests of better relations with us.
2. The Chinese may well have expected that after Kr. Grey's release there would be steady progress towards the release of confrontation prisoners or possibly a negotiated settlement of all outstanding problems. They were therefore rrepared to release five other British subjects as an earnest of good will. They have probably now concluded that further progress is unlikely. They are no doubt also displeased because, except in the commercial field, we have made no particular effort to court them. On the contrary, there have been very strong rrotests about l'rs. Kartin and Kr. Fc3ain: increased publicity about the treatment of British subjects now released, as well as those still detained; this Fission has continued the policy of resisting unreasonable Chinese demands in the administrative field, protesting ebout Chinese discourtesy and so on; and Reuters have decided to suspend their operations.
3. The Chinese have indicated their displeasure by a concentration of anti-British articles in the Chinese press following up the long article of 26 December on our economic difficulties (reported in my telegram No. 771 of 31 December 1969). In the period 9
In the period 9 - 26 January
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there have been fourteen substantive anti-British items on a variety of domestic and external topics, as well as numerous incidental references. From our experience of the Chinese treat- ment of other countries, it is clear that such a concentration could not be accidental. Furthermore, the Chinese have been totally unco-operative in granting rmission to travel to members of the Hission, whereas members of other Kissions have been allowed to do so.
The Situation in Hong Kong
LeComme
4. The situation is at present quiet. Local communists appear to be engaged in a slow rebuilding of their position but are under instructions not to cause trouble. The Prisons Board of Review has completed its vork and has not
ed at rem 88 1 7 † According to sentences on any further confrontation prisoners. the Chinese, there are still 134 left (earlier Hong Kong informa- tion had predicted 125 at the end of 1969 - see the paper forwarded by the Political Adviser under reference 3CR6/2621/67 of 30 October, 1969). The criteria in accordance with which the Review Board work
If this is so, we sug est that further remissions are unlikely. shall have to wait until the end of 1974 before the total of prisoners is down to 7 and by the e
iin
ere w
The question of an amnesty for confrontation prisoner's has been ruled out by the Governor. At the meeting with officials in London on 25 November, the Governor agreed that he would consult in advance before any new measures were taken against communist sympathizers. He was urged to exercise restraint in the interests of British subjects detained and the functioning of this Hission, but gave no undertaking to do so. The possibility remains that certain confrontation prisoners for whom warrants are still out- standing might be arrested and if the sentences they receive are comparable with those in 1967 (e.g. 5-8 years) the list of long- term prisoners could lengthen.
Prospects
5. The Chinese would probably like to improve relations with us both as part of the general process of normalization in external relations and because they wish to maintain their lines to the West in the event of increased difficulties, or even hostilities, with the Soviet Union. At the same time, relations are in many respects already satisfactory from their point of view in that trade in and through Hong Kong is being maintained, and they are able to increase their trade with the United Kingdom in so far as they wish, despite the political difficulties. They know that no effective sanctions
ill be taken against them in the interests of British subjects; indeed it is difficult to see that any form of sanctions is feasible. For these reasons, I do not think that there is any pressure on the Chinese to be helpful towards us in the political field in the absence of movement on our side.
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6.
The following is my assessment of the probable results of the position we have reached:-
(a) There is little chance of early release of the remaining Pritish subjects detained except (1) on grounds of health, which might apply particularly to Er. McBain; (ii) if the Chinese became convinced they were gaining j nothing by a hostage policy, and that their international image was being adversely affected by the publicity given to it; (111) in the unlikely event of their wishing at some time in the future to make a gesture towards us. (1) seems the best hope, and (ii) just possible.
(b) There will be no remission for 'r. Watt. (Unless, as seems just possible from his letters, he becomes BO brain-washed or mentally unstable that the Chinese decide to deport him.) In the normal course of events, he should be released in September this year but the Chinese might keep him until Farch 1971, as, though he was arrested in Ceptember 1967, he was not sentenced until Karch 1968.
(c) There may be less administrative co-operation by the Chinese with this Mission, which could among other things affect the rebuilding of the Chancery.
(a) Travel by members of the Kission may continue to be curtailed.
(e) The Chinese may continue the ban on ritish businessmen in Hong Kong attending the Gunton Trade "airs, and not extend the list of United Kingdom businessmen whom they allow to go.
-
(f) The Chinese might discriminate against us commercially by choosing to buy certain items of comparable rice and quality such as machinery, lorries etc. from our competitors. This could seriously affect our export figures if, as we think, Chinese purchases of non-ferrous metals from the London l'etal Market fall off in the coming years.
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(g) It will become increasingly difficult to make effective representations about British subjects in China and thus to sustain to Ferliamentary and public opinion the credibility of our efforts to help them.
(h) It will be very difficult if not impossible to conduct a dialogue with the Chinese on any general political subject. Though it would be unrealistic to suppose that a "Yestern country,or indeed any country,could have a real influence on Chinese policy, there might be advantage at a time when the Chinese are beginning to enlarge their diplomatic
/contacts
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contacts, when there is the prospect of diplomatic relations being opened with other "estern countries, and when the Chinese have renewed talks with the Americana, in their hearing a European voice other than the French, and to a lesser extent the Forwegian.
Conclusions and Recommendations
7. If the situation over prisoners in Hong Kong rusaing unchanged, I think re must be prepared for a
in our political relations. As prisoners are gradually released the Chinese may release "ritish subjects one by one and after a number of years they might decide that the remainder are an encumbrance and release them also, while tacitly accepting the continued imprisonment of a small number of their sympathizers in Hong Kong. This could well take some time as even by the end of 1972 there will still be 44 prisoners left (plus the two with life sentences).
8. My recon, endations are:
(a) Te again put to the Chinese the proposal that confrontation prisoners should be "returned to China". The chance of their acceptance is slight but the attempt should be made.
(b) Publicity about remaining British subjects detained should be maintained at as high a level as possible.
(c) The Governor should be pressed to continue the len movies of sentences. If there are any
Or compassionate grounds to
the opportunity should be taken
(d) Every opportunity should be taken to emphasize to the Governor the need for restraint in action against communist sympathizers and for full consultation in advance of action.
i
COLVI
212
CS. 41A
2600077
5,000-2/69-170130
REF. SCR 4/3571/62 III
CONFIDENTIAL
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Pipi please
Dear Janes,
COLONIAL SECRETARIAT
LOWER ALBERT ROAD HONG KONG
5 January, 1970.
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int for coquent in consultantin with
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1.K. Deft
По Анверси
Jug 16 Fe
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FEN 1/1
Thank you very much for your letter of 5 December enclosing a copy of the paper dated 21 November on Sino- British relations in the context of Hong Kong and a copy of the note of your discussion with the Governor on 25 November. I have read them with great interest.
2.
In paragraph 3 of your letter you ask for some account of the recent activities of the Prisons Board of Reviev. The last report which you had in mind was, I think, our tele- gram No. 562 of 14 July in which we said that the attorney. General vas going away on leave and duty for eight veeks and the Board would not meet again until approximately the end of September.
3.
The Board has in fact met since then only on 25 September and 4 December. The Board are, of course, working within the terms of the old Colonial Office Circular No. 577/60 (C.0. ref: SSA 197/04) of 26 May 1960 which guides them in their deliberations, and it would be a matter of very consider- able difficulty to suggest they should apply any different criteria to confrontation prisoners.
4.
The Board vorks under Prison Rule 69A, a copy of which you have but for the sake of convenience I attach another copy.
5.
At the meeting on 25 September the Board considered only routine cases. It considered none of the special reviev cases which arose from the Governor's initiative reported in his telegram No. 212 of 10 March. The majority of the cases revieved on 25 September (YOL
and dangerous drugs but there vere 11 cases of young confronta- tion prisoners whose sentences came up for a routine review in accordance with Rule 69A(2)(iv). The Board recommended no change in the sentences of these 11 prisoners which had in any case already been reviewed as part of the special review of confrontatjangrisoners sarlier in thezuar. The Governor accepted this advice.
J. Murray, Esq., CMG,
Far Eastern Department,
Foreign & Commonwealth Office,
LONDON, S.W.1.
/Contd...
ONFIDENTIAL
2
1
Also
6.
At the meeting on 4 December there was a similar batch containing "ordinary prisoners" and five young confrontation prisoners who had already been revieved, and vhose sentences were not recommended for any change. on 4 December the Board examined the last batch of confrontation prisoners whose sentences had not previously been revieved this year. This batch numbered 22 confronta- tion prisoners all serving long sentences for offences involving live bombs or revolver snatching. The Board concluded that there were no grounds for recommending a change in the sentences of any of these 22 prisoners. The Acting Governor accepted this advice. This brings to an end the special review of confrontation prisoners arising from the Governor's decision of last March,
7.
The Board's recommendation on this last batch of 22 prisoners followed from their earlier decision that remission should not normally be recommended vhere personal violence was used by the accused, where he was in possession of explosives or in the company of someone in possession of explosives or where he vas on premises containing explosives or offensive weapons.
8.
This therefore concludes the special review by the Board of Reviev. Although it will continue its normal work it is unlikely that its recommendations will have any significant effect in bringing forward the date of the release of the remaining confrontation prisoners.
9.
I am sending a copy of this letter to John Denson.
You
eve
Auther
(A.F. Maddocks)
CONFIDENTIAL
PRISON RULE 69A
69A. (1) The Commissioner shall submit to the Governor for review the case of any prisoner of any category specified in the first column of paragraph (2) at the intervals specified in relation thereto in the second column of paragraph (2).
(2)
(i)
First Column
Imprisoned for a term exceeding six years (other than (ii)).
(ii) Imprisoned for life.
(iii) Detained during Her Majesty's Pleasure.
(iv) Under 21 at the date
of the offence for which imprisoned.
Second Column
After four years and every two years thereafter.
After four years and every two years thereafter.
After two years and every two years thereafter.
After one year and
every year thereafter.
(3) Nothing in this rule shall prevent the Governor, in his discretion, from reviewing the case of any prisoner at any time.
(4) When the case of any prisoner falls to be dealt with under this rule, reports shall be submitted
(a) by the Medical Officer, on the mental and physical
condition of the prisoner and whether or not, in his opinion, imprisonment has had or is likely to have an injurious effect on the prisoner's health;
(b) by the Superintendent, on the conduct and industry
of the prisoner in prison and on any matter which might, in his opinion, be relevant to the review.