HONG KONG

HC Deb 11 April 1963 vol 675 cc1512-41

1.39 p.m.

Dr. Jeremy Bray (Middlesbrough, East)

It is many years since the House had an opportunity of giving its full attention in debate to the affairs of Hong Kong. I am sure hon. Members will feel that it is high time that we did so. I trust, Mr. Deputy-Speaker, that you will allow this debate to overrun at least to the extent it has been overrun by its predecessor.

Hong Kong is now our most populous dependent territory, with a population higher than that of New Zealand and a foreign trade equal to half that of the whole of India. It has our sole common frontier with the Communist world and it is our most intimate contact with the most numerous race on earth. I think that hon. Members will agree, too, that we have a special responsibility for the 3½ million people, mostly Chinese, who have chosen to live in Hong Kong.

I know that many hon. Members wish to speak so I will plunge straight into the consideration of the future of Hong Kong without dwelling on its great past achievements or upon the spell which it casts over all who visit Hong Kong, a charm which I have known since my childhood, for I was born there. Much needs to be said about the social and political developments within Hong Kong and I hope that my right hon. Friend the Member for Middlesbrough, East (Mr. Bottomley) will have an opportunity to say something about this. My time is limited, so I shall concentrate on the economic and external affairs of the territory.

The key to the understanding of Hong Kong and of its future is its unique economic position. Hong Kong has enormous overseas trade. Since 1952, when industrialisation and local manufactures began in a big way, Hong Kong has had a very large gap in its balance of visible trade. In 1962, the value of exports was only 66 per cent. of imports, leaving a gap of £140 million in an import bill of £420 million. Most modern economies certainly do have a deficit on visible trade, including our own, but whereas our gap has not exceeded 10 per cent. in any recent year, Hong Kong's is 34 per cent. India certainly has a comparable gap, but this is in a country which has an enormously larger domestic economy, and in India it is covered by carefully negotiated loans between Governments. Hong Kong receives no Government loans.

Some of the gap in the balance of Hong Kong's trade is filled by invisible earnings, notably from tourism, but undoubtedly the large remaining gap indicates a very substantial inflow of capital. The source of this capital, I understand, is mainly overseas Chinese all over South-East Asia who are investing their money in Hong Kong, and who find it profitable to do so. No one seems able to say just how large is this capital inflow. One reason for this lack of statistics—which is being remedied now—is the happy position of the Hong Kong Government in having practically no national debt.

As the Government have not had to borrow money they are not bothered about having to pay it back, or paying interest on debt. So the Hong Kong Government say that the balance of payments is self-regulating, surely an ideal economy in the eyes of the hon. Members opposite. The Government just do not have to know what is going on in the way that we have to know in this country. This is fine so long as the capital inflow continues. Even if the capital inflow falls off the Government can still avoid embarrassment to themselves or to the currency by reducing their spending on capital goods, on capital programmes. It would be the private citizen, the ordinary worker, who would suffer.

Much of the money coming into Hong Kong is now being invested in property. The supply of land is very limited and it all belongs to the Government and the Government make a good deal of money by the sale of land leases at prices which put London's land prices quite in the shade. Government income from this source in 1962–63 doubled over that of the previous year to over £11 million, and it is sufficient to finance the whole of the Government's impressive public works building programme for housing, education, and health services. So the private property investor from abroad is financing the Government as well as the private building in the economy.

There is, of course, a spiral in this investment boom. It is highly profitable to invest in property which is to house the people who are to build the next property in which one is to invest, and so on. The Hong Kong Government are very well aware of the dangers of such a boom running away to the point where it "busts", with a fall off in new investment destroying the profitability of former investments. In his Budget speech on 27th February, the Financial Secretary in Hong Kong said that one of his nightmares is that by rapid and wasteful expansion we come to the end of our resources with an incomplete and unbalanced structure". In other words, it is necessary to build up Hong Kong's industry and trade so that it can earn a sound living. Certainly, no one development will secure this, but it does seem to me that a new element is needed in the situation other than the old battle of tariffs and quotas.

It would be helpful, at this point, to consider the political position of Hong Kong. It exists because it is useful to China, not only as a meeting place with the outside world but as a very substantial source of foreign exchange. Hong Kong imports, mainly of food, from China in 1962 were £75 million. Its exports to China were £5 million, leaving China with foreign exchange earnings of £70 million.

From China's point of view this meeting place with the outside world is as convenient in British hands as any. As an independent territory everyone recognises that it would become a cockpit for the struggle between Chinese Nationalists and Communists which could only lead to its absorption into China, with the loss of its value as a meeting place. Also, in this House we should recognise that the integrity and efficiency of the Administration in Hong Kong is seen to contribute greatly to the well-being of the people of Hong Kong. That is not to say, of course, that there is no urgent need to continue reform and advance.

Looking to the future, if we can build up a sufficient mutual interest between Peking and ourselves in the continuing prosperity of Hong Kong, then, when the time comes at the end of the century, I can see no reason why the lease of the New Territories should not be renewed, with the courtesy of a host providing a guestroom for an honoured guest who brings long life and happiness.

We have, then, a dual task. We have to build up a viable economy in Hong Kong which will not depend on the capital inflow continuing for ever, and we have also to build up mutual interest between Peking and ourselves in maintaining and increasing the prosperity of Hong Kong. This debate occurs at a time when the Chinese Vice-Minister for Trade, Mr. Lou, is on a visit to London. I am sure that we all hope that his visit has been worth while and that it will lead to growth of trade and good relations between his country and ours.

China is today looking for practical technological "know-how", for experience in modern industry, for plant and machinery for advanced engineering products for the manufacture of fertilisers, chemicals, steel, and so on. This is precisely the kind of industry which Hong Kong lacks, partly because of its shortage of land and water, but mainly because of a lack of a large domestic market for products with high transport costs.

If such industry were placed in Hong Kong, China would hardly wish to find the foreign exchange to buy its products, so that would not help. On the other hand, such industry could be built up by China under her own control and ownership on her own territory, next to Hong Kong and complementary to Hong Kong's industry. A modern fertiliser, oil, petrochemical and steel complex needs access to deep water berths for 100,000 ton tankers and ore carriers which could well be built round Hong Kong.

No less important than access for bulk materials is nearness of supporting in- dustry, trade, and commerce, air communications and know-how. All of these can be found in Hong Kong, where most major British firms are already well represented and where development could proceed rapidly and efficiently. With Canton the centre of communications in South China, with ample crude oil supplies available in the world, with the rich iron ore deposits in Hainan, the river estuary between Canton and Hong Kong is the natural site for this type of heavy industrial development in South China.

China, naturally, would wish to shape such development to meet her own need to build up agriculture and the infrastructure of industrialisation. So it would be more an industrial development exercise than merely an old-fashioned spot sale. Payment would need to be arranged so that it was made out of, for example, the increased food production which would be achieved by the use of fertiliser from new fertiliser plants. China would, therefore, ask for credits. The British Government in London could easily raise loans in Hong Kong to finance such credits, provided that they carried a guarantee from London, for which, in turn, London would obtain a guarantee from Peking. An arrangement on these lines could well provide an export trade from this country of £30 or £40 million a year for many years.

Such a development scheme would give Hong Kong the solid base which it needs. By industrialising and raising the standard of living in China, it would also avoid the sharp economic differences between the two sides of the border which can make it humanly and. therefore, politically unstable. It would give both China and ourselves a major interest in the continued prosperity of Hong Kong.

This may seem to many a daring scheme, but I ask the House to consider whether anything less is possible. It seems to me to be in line with the most constructive efforts of British foreign policy in the past. It is, of course, a matter for us in Westminster, and we should not expect—we obviously cannot expect—the Hong Kong Government to take the initiatives involved. Certainly, everything will depend on the reaction of people in Hong Kong and of Peking, and, in turn, their reaction will depend on their judgment of the British attitude. To them I would merely say that, for what my judgment as a back bencher is worth, the British Government would consider some development on these lines with interest.

Any such development would, of course, have international repercussions. I am sure that everyone in the House will be thinking of India to which we owe our especial loyalty as a free and democratic member of the Commonwealth whose own development is our dearest wish. Development of relations such as those I have described with China through Hong Kong would not be possible if China and India were engaged in a border war. l have this week called upon the Indian High Commissioner to tell him that this proposal which I am making, far from being unfriendly to India, is intended to cement the foundations of peace. I think this is understood. No one understands more clearly than our friends and colleagues in New Delhi that a necessary foundation for peace is the end of poverty and hunger and the development of the economy in China as in India itself. We have supported many projects such as this in India, and I earnestly hope that we shall support many greater projects. This proposal in relation to China and Hong Kong is therefore in no sense competitive with India, a country which has an even greater stake in the peace of South-East Asia than we have.

To sum up, I would ask whether we see Hong Kong like the string of crackers with which our Chinese friends so delight to welcome us, flashing and banging and then leaving the deepened stillness of a tropical night; or whether we see Hong Kong like a seed which will grow into a tree which the children and the children's children of all those millions in China and in Hong Kong will see, and seeing, give thanks for the labour, the wisdom and the piety of their ancestors.

I do not expect the Government to reply today to the points which I have made, but I would ask them to consider what they should do and to listen to the reaction and responses of our friends in the East; and then to respond with vigour.

1.56 p.m.

Mr. Anthony Royle (Richmond, Surrey)

I congratulate the bon. Member for Middlesbrough, West (Dr. Bray) upon initiating this debate. All of us who are interested in Hong Kong welcome the chance to talk about the Colony at Westminster. I have visited Hong Kong twice during the past year, and have just returned from there.

While, naturally, all of us on both sides of the House were very interested in the hon. Member's thoughtful suggestions about the Colony's future, I feel that much of what he put forward is not practical at this moment. I believe that the more appropriate way to strengthen Hong Kong is to strengthen her trade position, that is, by strengthening her ties with and her markets in South-East Asia and other parts of the world. While it is right that we should all give careful thought to such problems as the hon. Member put forward with such care, I feel that there are other matters that we ought to discuss today.

The first thing that struck me when I heard that there was to be this debate was the vital necessity for the future of Hong Kong that the confidence of businessmen and other countries in Hong Kong should continue. When I returned from Hong Kong at the end of January I was wholeheartedly impressed with the drive and dynamism which exists there. It has a population of 3½ million people, increasing at a rate at the moment of nearly 250,000 per year. Some of this is natural increase and some is the result of illegal immigration, with which I shall deal later, if there is time. It is, therefore, vital for Hong Kong that it should expand to keep pace with the population increase. This expansion can be done and is being done through the drive and vigour of the Chinese community and the help that it gets from our excellent administration in the Colony.

During a short visit to Red China, to Canton, I saw the industrial situation—I do not know whether the hon. Member has recently done so—in Kwantung Province, of the Chinese People's Republic. This is another reason which leads me to believe that now is not the moment to put forward economic suggestions for building industry in the way the hon. Member suggested. I do not believe that it could have practical acceptance from Peking at this moment.

The population growth of the Colony, which, as far as one can see, will continue for some years ahead, will be increased even more by the steep rise of school-leavers that will soon be injected into the labour market. Last year, the economic expansion reached a phenomenal pitch, being about 15 per cent. increase of the gross national product. That was a magnificent achievement.

It is very important that the Government here should continue to encourage this expansion, for there is no home market in Hong Kong. Its rival, Japan, has a home market. Hong Kong has to look to the United Kingdom for the home sales on which to base its export drive, which is of such great assistance to the United Kingdom. Exports of locally manufactured goods increased last year by nearly 13 per cent. over 1961 to reach a record level of £200 million. I am convinced that the Colony should press forward with its exports to South-East Asia, helped by the United Kingdom Government.

Here I would pay tribute to the Colony's Department of Trade and Industry, which is an outstandingly well-run Government Department, as hon. Members on both sides of the House will agree. The Department is investigating the possibility of bringing the benefits of Export Credits Guarantee to the Colony. Under our present arrangements for export credits guarantees, these guarantees cannot be applied to our overseas territories, according to my right hon. Friend the President of the Board of Trade. Nevertheless, the Board of Trade is being extremely helpful in assisting Hong Kong to find methods of using the E.C.G.D. arrangement.

When the Common Market negotiations regrettably collapsed, some people felt that the problems which Hong Kong faced in the immediate future had been swept away, but that is not so. The main problem is always there. If Hong Kong stands still it dies. If it is to continue it must expand, and it must continue to expand. That is why I have emphasised expansion so strongly. No one can avoid being immensely impressed by the Colony. Its factories, despite the criticisms made by hon. Members on both sides of the House in the past, as a whole have a standard of welfare, amenity and organisation with which few in this country can compare. I have visited the magnificent textile mills and factories on the Kowloon side of Hong Kong, which are a very great credit to the colony.

Mr. Ernest Thornton (Farnworth)

Has the hon. Gentleman visited some of the small industrial establishments?

Mr. Royle

I have visited a firm called the North Pole Knitwear Company. It has a small factory off Nathan Road which employs 16 to 20 women in a small room at the top of a housing block. I have visited all types of factories in Hong Kong. I think that what the hon. Gentleman is getting at is the misunderstanding many people show in trying to compare conditions generally in Hong Kong with conditions in Europe. In fairness, one must compare Hong Kong's conditions basically with conditions in other South-East Asian countries.

By that, I do not mean to say that many of the factory conditions there are not of a far greater standard than many such conditions in this country and in many other European countries. But we must resist the tendency, shown by many people who have not been there, to say that Hong Kong is full of "sweat shops." That is not true. I have investigated this carefully, and I believe, that it is time that a sense of proportion was brought to bear in looking at the industrial setup in Hong Kong. It really is very impressive. I do not think that I have ever seen welfare facilities on such a scale and so well organised as these I saw on my recent visit.

Also improving rapidly is the quality of the goods produced in the Colony. This is something of which many people are aware in Hong Kong, regarding it as of great importance. In many cases they are competing with the products of Japan, which have shown a startling increase in quality during the last two or three years. The drive for better quality is being backed by the Federation of Chinese Manufacturers in the Colony, the Chamber of Commerce and other bodies, to try to bring quality standards up to the best in the world. I believe that they have already made a successful start.

The range of goods is already very wide indeed. One firm which is expanding is Haking Industries, on the Victoria side of Hong Kong, producing cameras and very fine binoculars. It did extremely well at a recent trade fair in Germany, where it was in competition with some of the finest binocular makers in Germany and in Europe.

It is typical that the drive, energy and increase in quality and workmanship in Hong Kong have produced another criticism over certificates of origin. Some people do not seem to believe that a certificate of origin indicating that the manufacture of an article has been in Hong Kong is to be trusted. I went into this criticism carefully on my second visit to Hong Kong. I am convinced that the certification procedure carried out by the Chamber of Commerce with the assistance of the Chamber of Commerce and other bodies is first class. I have no doubt that a certificate saying "Empire Made", or "Made in Hong Kong" means what it says. This has been confirmed by the Board of Trade.

The tourist industry should not be forgotten. Under Major Harry Stanley, who is the director of the tourist board in Hong Kong, this industry has been expanding in a big way in the last two years. Two large and very imposing looking hotels are going up on the front at Victoria, and although they are not quite as tall as the new Hilton Hotel, in London they are just as impressive. Many of the hotels have Chinese managements. This will encourage tourists to visit Hong Kong and will help the invisible exports of the Colony.

Equally, the Hong Kong Government are playing their part, although I do not want to go into that in detail now. To meet the expanding population education must obviously be improved. At the moment, Hong Kong is opening one new State or private school every four days in the Colony, which I think, is a rate not exceeded anywhere else in the world. One new eight-storey block of flats is opened every ten days. These blocks are impressive and are vital if the Hong Kong Government are to keep up with the expansion in population.

Another development by the Government of great importance for the future, and in which great strides are being made, is the Plover Cove water scheme for the New Territories. My hon. Friend the Member for Folkestone and Hythe (Mr. Costain), who has visited it, will have been able to look with a more experienced eye than I have. This scheme, which is to cost many millions of pounds over the next few years, is well under way and tenders have already been given for the second stage which entails the building of a £10 million dam. All in all, the House can be proud of the way in which Hong Kong is growing and expanding, something it must do if it is to keep going during the years ahead and something which I have no doubt that it will do.

However, there are one or two slightly darker spots on the horizon and I should like particularly to mention one of them. It is the position of Hong Kong's trade with the United States of America. There is no doubt that over the last few years, with the Colony's agreement, there has been a quota on sales of textiles from the Colony to the United States and the United Kingdom under the Geneva agreement, but there is also no doubt that the United States is deliberately making things more and more difficult for the Hong Kong industrialist and the Hong Kong shipper and has been doing so for some time over a large range of other products.

The United States is putting a great deal of money into South-East Asia, wisely in my opinion. I have visited Thailand, Malaya, South Vietnam and other countries in that part of the world and one cannot but be immensely impressed with the efforts, the skills, the teachers and the technicians which the United States is putting into South-East Asia to help to raise the living standards for the millions who live there.

It has no need to do this with Hong Kong, which runs on its own and which does not cost the British taxpayer a penny. Indeed, it sends £1½ million a year towards our defence budget. At the same time, Hong Kong would welcome some assistance from the United States by way not of grant or aid, but of opening its own doors a little and making it easier for Hong Kong manufacturers who would like to sell in the United States.

Another factor comes into this, a political factor. It concerns the Red Chinese element in any of the products made in the Colony. While I was in Hong Kong, I was told a story about some shrimps, which shrimps were caught in the bays and coves around the colony and were then canned or packed to be exported to the United States. United States representatives inquired from Colony officials where the shrimps came from. Did they come from British or Chinese territorial waters? As it was not allowed to import Chinese shrimps into the United States, and as it was clearly impossible for the Hong Kong people to tell exactly where the shrimps had started their journey, whether in Hong Kong or Chinese waters, this trade came to an end overnight, causing great unease and unemployment among the fishing community of Hong Kong.

An improvement in the United States attitude towards such imports would be greatly appreciated in Hong Kong and the United States authorities should reconsider their attitude. Direct aid is not needed. Hong Kong needs help and assistance not as open-handed gifts, but in liberalising trade and allowing goods which have started their life in Hong Kong to enter the United States.

People in this country have recently been reading of the operations of bomb squads which have been going into the Chinese People's Republic with the backing of Chiang Kai-shek and the Kuomintang Nationalist Government. It is suspected that many of these squads have been operating or endeavouring to operate out of the Colony of Hong Kong.

I should like my hon. Friend the Under-Secretary to press his noble Friend the Secretary of State for Foreign Affairs, in his turn, to take strong action by asking the United States authorities to bring pressure on Chiang Kai-shek and the Formosan Government to cease these activities from Hong Kong. They are not only upsetting to the people who live in the Colony, but also upsetting to the Chinese who live on the other side of the border and who suffer from these pinpricks, which neither politically not militarily, can in any way assist the Formosan régime. I hope that my hon. Friend will pass on this protest.

There is no doubt that Hong Kong is the shop window of the West in the Far East. It is a community of its own and is slowly but surely being accepted throughout South-East Asia as a community. It is a living symbol of Chinese versatility and hard work allied to the genius of British colonial administration at its best. I have no doubt that it will continue to expand and prosper in the years ahead so long as we at Westminster and the people of this country do not forget it and as long as the Government continue to assist the Colony on its way.

2.17 p.m.

Mr. H. Rhodes (Ashton-under-Lyne)

Coming as I do from an area which is traditionally antagonistic to cheap competition from the Far East, whenever I go to Hong Kong I go to the border for correction. I look across the border to a small village which looks for all the world like a Cotswold village in Red China. There I see a large tower which is, or used to be, a pawnbroker's shop where the rich man of the village took in the winter clothes of the peasants after he had dished out the seed. He did not make his bargain with the peasant for his crops until the cold weather came again and then he gave out the clothing. That was what the tower was for. It was not a church. Coming back into Hong Kong I always appreciate that the people there come from that kind of background, possibly improved under the Communist régime, although that is a matter of opinion.

In many ways, Hong Kong is an anachronism. We have a tenuous hold on a tiny bit of seaboard belonging to a nation with 650 million inhabitants which is destined to be a great Power. A large part of the Colony, Kowloon and the New Territories, is leased for a further thirty-five years. The only security we have is a small military force which could not, and would not, engage in a shooting war if it came to a showdown. The population has a large Communist element and the remainder is fundamentally loyal to China.

Apart from a few Chinese who could be counted on both hands, none owes avowed allegiance to the British Crown. Couple all that with the massive influx of refugees, not necessarily fleeing from a Communist régime as such but seeking food, shelter and an opportunity to live and to learn the technical "know-how" of the spanking, up-to-date industrial economy in Hong Kong, and we have the background to the situation there.

Those are the problems. How has the administration shaped up to its job? There is not time to expand on this because other hon. Members wish to take part in the debate.

First, I would like to deal with criticism of the entrepreneur and the industrialist. Without the adventurous industrialist and entrepreneur in Hong Kong, even of the swashbuckling types that we have met there, developments could not have taken place. To have gone round the bourses of the world cap in hand for the means to do the job in some other way would have ended in dismal failure because of the tenure of occupation alone. We know what results have been achieved.

Secondly, have they fed the population. I suppose that I have taken more than 100 photographs each time I have been there, mainly with the intention of seeing whether the people were suffering from starvation. There may have been some evidence of it when I was there in 1958 but I saw none the last time I went there. Thirdly, shelter. They house 4,000 people every nine days.

Fourthly, education. When I think of the 700 senior students who faced me at the Tewang college run by a friend of mine who over twenty years ago started the college with three students, and now has 700 students who attend in three shifts and are likely to move into magnificent new premises this year, I am proud not only of a man from my locality who has dedicated his life to this job but of the Government.

We have heard a lot about representative Government; the desire to broaden the basis of the Government and to bring in electoral reform. Let us be careful. Make no mistake about this. This regime in Hong Kong is acceptable to China. A less prosperous Hong Kong would not be, and the road to ruin would be to introduce the political forms of Singapore with the trappings of this place, which are completely foreign to the concept of the Chinese in Singapore and Hong Kong. We have left confusion and bitterness in Singapore. If we had been able to leave in Singapore a legacy of a built-up industrial economy which would have been the hub of prosperity in Malaysia, I should have been prouder of the British régime there.

Whether Hong Kong is under Britain or China will not matter very much in fifty years' time. What will matter is that at a time when the Far East was struggling to break the shackles of poverty and ignorance we made a signifi- cant contribution. I owe a debt of gratitude to Hong Kong, because it has shown me what my poorer fellows can do to overcome poverty and ignorance when they have a chance to do so. So much so that during the last few years I suppose I have lectured to 5,000 senior students in my constituency with a view to giving them some idea of how other people less fortunate than they have taken the chances offered to them.

Industrialisation on a large scale is necessary to deal with the problem of poverty in Hong Kong. It is no use the Western countries thinking that they will solve poverty in the Far East by arrangements about commodity prices alone or plans of that description. If we think that by keeping down, and keeping to ourselves if we can, the means of manufacture, we can keep the people in Malaya, Indonesia, Laos, and so on, quiet on the basis of commodity prices, we ought to think again.

Hong Kong is an industrial beacon beckoning the poverty-stricken folks in the Far East and giving them hope that at any rate industrialisation will provide them with a chance to live.

2.26 p.m.

Sir William Teeling (Brighton, Pavilion)

I listened with immense interest to the hon. Member for Middlesbrough, West (Dr. Bray), but I think that he is looking a little too far ahead. If the hon. Gentleman wants to look to the future, he should look to the more immediate future. Because of what is happening in the world today, how can we tell what the situation will be thirty-five years from now? We cannot tell whether by that time we shall not have some international system in Hong Kong.

I do not regard Hong Kong so much as a Colony as a trading post. It is different from our other Colonies. There are only about 50,000 British European residents there. Of those, nearly 30,000 belong to the Hong Kong Shanghai Bank and stay there for only a few years. Most of the other 3 million people there are not British subjects at all, and it must not be forgotten that although they come out of Red China a large number of them are not citizens of Red China. Many of them consider themselves to be citizens of Nationalist China.

Mr. A. Royle

My hon. Friend said that 30,000 of the people there were employees of the Hong Kong Shanghai Bank. Is that figure correct?

Sir W. Teeling

I think so, but we can always check it.

Dr. Bray

They are not all in Hong Kong.

Sir W. Teeling

No, but they go backwards and forwards. There are more than 30,000 employees of the bank, a large number of whom stay there for only a few years, but that really has very little to do with the point at issue. The real point is how many Chinese there are on the island.

The Americans have strong feelings about the whole Red China situation, and if we are to be practical we have to face the fact that even if Red China ever wanted to take over Hong Kong there would be both American and quite strong Formosan military elements which would do their best to stop this, and it might well lead to a third world war. We must therefore try to appreciate the position of the Hong Kong Governor and his Executive Council, who have to realise that the vast majority of people on the island are not British subjects and that there is almost as strong a pro-Nationalist element as a Communist one, and that therefore the Governor should steer a course between the two. In the meantime, the Governor has to do everything he can to improve Hong Kong as a trading centre for the whole of South-East Asia, and, as has been pointed out, almost the whole of South-East Asia is closely in touch with the United States.

What we have to look to in the future is seeing how far we can trade with Communist China while, at the same time, avoiding cutting across arrangements already made with the United States so that we do not put into Communist China anything that could be of military use for attacking India or other parts of the world. This being so, we must stress that our own British elements there and the very fine types of Chinese who have lived and worked there are now doing, and have been doing over the years since the war, an immense job in rehousing the immigrants and finding work for them. This country would do well to examine how they manage to put up so many houses so quickly, efficiently and cheaply.

We are told that the Chinese Nationalists are using Hong Kong as a jumping-off ground for different organisations, but hon. Members should read some of the relevant literature, such as the book A Man Must Choose which Longman's have just published, by a former Communist journalist. He gives a full description of his experiences with the Communist elements in Hong Kong in their efforts to control various organisations in a not very different way from American gangsters. In spite of that, the Government have immensely improved the whole situation in Hong Kong and have made it a window for England in South-East Asia. We have vastly improved our position there. A great deal more can be done through the Hong Kong banks. They are responsible for the fact that there is no debt to the British Government, and we remember how wonderfully in the year after the War they gradually redeveloped the whole area after the chaos of the Japanese invasion.

I submit, therefore, that in future we must make a point of remembering the difficult position of the British element in Hong Kong and the fact that the Government there have to bear in mind that they have only small British forces at their disposal and must be as friendly as possible with both sides if they are to steer through—

Mr. Philip Noel-Baker (Derby, South)

What does the hon. Member mean by "both sides"?

Sir W. Teeling

In Hong Kong? I explained that there are 3 million Chinese there, both Communists and Nationalists, who are not British subjects. Our problem is concerned with the Red Chinese who have come in and have not taken British nationality who still consider themselves to belong to the mainland and who can go back at any time, and also the people who have remained in Hong Kong since the Kuomintang days on the mainland or have come there as refugees since and have never wanted to be Communists.

2.33 p.m.

Mr. Ernest Thornton (Farnworth)

I also want to thank my hon. Friend the Member for Middlesbrough, West (Dr. Bray) for giving us the opportunity of this debate. I am second to none in my appreciation of the massive problem which Hong Kong has faced and the massive attempt that has been made to deal with this problem, but as the debate has gone I feel that altogether too complacant and too rosy a picture has been painted.

The suggestion was made that comparisons should be made between Hong Kong and other Asian countries. If the hon. Member for Richmond, Surrey (Mr. A. Royle) will do me the honour of reading what I had to say in the debate on Hong Kong he will find that my one criticism was that conditions there have failed to match up to Asiatic standards. I called the attention of the House five years ago to the fact that industrial workers in Hong Kong, women and young persons, were working 12-hour shifts seven days a week with only four days holiday a year. As a result of my repeatedly bringing this to the attention of the House, Miss Ogilvy was sent out by the Colonial Secretary and new labour legislation came into force providing for a maximum 10-hour day six days a week for women and young persons.

I ask the Under-Secretary of State for the Colonies today, from his personal interest, to follow up this matter. Five years ago this was said to be a step towards achieving Asiatic standards. A maximum 9-hour day is prescribed by law in Asiatic countries for women and young persons. I ask the hon. Gentleman to look into this with a view to the next step being taken to reduce the maximum number of hours worked by women and young people and also to satisfy himself that the present regulations are being honoured and that the honouring is being supervised.

2.35 p.m.

Mr. A. G. Bottomley (Middlesbrough, East)

It is a happy coincidence that this, my first speech from the Opposition Front Bench since my return to the House, should be on an occasion which provides an opportunity to congratulate my hon. Friend the Member for Middlesbrough, West (Dr. Bray). I think I carry the whole House with me when I say that my hon. Friend spoke on the subject of the debate with great knowledge and distinction.

It is remarkable that when Hong Kong was first becoming associated with this country Lord Palmerston said that he saw little value in the acquisition of this barren island with hardly a house upon it. Today we refer to its being very densely populated, and I join with those who have paid tribute to the people and the Administration there who are doing a fine job. Unfortunately, too many people look upon Hong Kong merely as a dangerous competitor, whereas it is an economic miracle.

The relationship of Hong Kong with the mainland had always been concentrated round trade. We have to acknowledge that the pattern of trade today is changing, and not only for political reasons. The Chinese People's Republic has its State agencies and is able to deal directly with manufacturers in Europe, because it is able to place such large orders. The middlemen in Hong Kong have suffered because of this. Eastern European countries are also producing goods which previously came from Hong Kong. The Chinese have been able to by-pass Hong Kong because of the way in which they have been able to develop the former French concession, the port now called Tsam Kong. The China trade, which was at one time about one-third of the total trade with Hong Kong, has now fallen to not much more than one-eighth of the total. This would have been disastrous to a less enterprising people, but Hong Kong saw that it had to change its trade tactics and it concentrated its efforts upon the export trade.

Since 1950, the export trade has increased from 5 per cent. to 70 per cent. of production. Textiles, the largest and most important industry, are experiencing considerable marketing difficulties. This is particularly true of trade with the United States and the United Kingdom. There is hope for the Hong Kong authorities, however, because at a recent G.A.T.T. conference a five-year agreement was signed by 19 major producing and importing countries to ease restrictions on cotton textiles.

There is a need for the diversification of industry. The Hong Kong authorities have rightly noted this. New enterprises, such as the manufacture of transistor radios and plastic flowers, are increasing at a rapid rate. New factories are being built everywhere. With the demand for labour there has been an improvement in wages, which is pleasing. It is also encouraging to find that some of the trade unions, especially those which have made it their particular concern to represent their members' interests in better conditions of service, are building up into efficient and well-organised unions.

I think I ought to make a plea that the Goverment should keep a closer eye on wages and conditions of service in present circumstances. They should ask employers to do all possible to recognise bona fide trade unions. The Chinese People's Republic will be interested in seeing the living standards of people in Hong Kong improved, because this will mean that there will be increasing demands for meat, vegetables, fish and other foods, as well as for the traditional exports, As my hon. Friend the Member for Middlesbrough, West said, this trade is of great value to the Chinese, because it provides them with millions of pounds of sterling with which they can buy goods elsewhere.

We in Britain have a great opportunity to recognise this new and developing pattern of trade in Hong Kong. Hong Kong could become for us in this country the springboard for a new and much needed British commercial drive and effort in the Far East. For that to succeed there must be stability in Hong Kong. This calls for greater equality and improved social services. I think it will be recognised that the rate of Income Tax in the Colony is ridiculously low. There ought to be some way in which those who have greater wealth could help to provide for improved social services. This is particularly so in the case of health services.

As hon. Members will appreciate, I could develop what I am saying much more fully, but I shall not do that so that I shall not overrun the time. I ask the Minister to consider the question of health improvement and the need to spend more on education, particularly in building and developing a teachers' training college. He might also give consideration to urging the establishment of a television service on the lines of that of the B.B.C. That in its turn would prove very valuable, not only as a means of communication, but in helping the education of the masses.

The people of Hong Kong should be given a greater say in their political future. There is only one elected institution in the Colony—the urban council—and the franchise is limited to professional people and householders. The Under-Secretary might reply that when the people have the chance to vote they do not do so and that only about one in five use their votes. I think the reason for that is that the urban council is not allowed to discuss any important matters. Those are all reserved to the Governor and an appointed legislative council and an appointed executive council.

I am not for a moment suggesting that the time has come for a radical change. Good reasons have been given this afternoon why that should not be so. I agree with my hon. Friend the Member for Ashton-under-Lyne (Mr. Rhodes), who speaks with such knowledge and authority about Hong Kong. There is a need now for some reorganisation of local government and certainly for a more representative legislative council. I ask the Under-Secretary to ask his right hon. Friend to give these matters consideration, because it is my convinced opinion that the objective should be to provide a forum for the political expression of the vast majority of the people who live in Hong Kong.

I mentioned to the Under-Secretary that I have had a letter in which there were allegations of interference with the freedom of the Press and deprivation of the liberty of the subject. That was the case of a man named Chan-Kin-Chin. I go no further now than to say that if the Under-Secretary can undertake to look into that matter, I shall be grateful.

The peaceful development of Hong Kong could be upset by political difficulties with the mainland. Fortunately there have been very few problems and little difficulty except in the one period in 1955 when the Chinese People's Republic said that the Nationalists' representatives were going to do something to interfere with the transference of Chinese representatives to the Bandung Conference. Unfortunately, a disaster occurred and fifteen Chinese and others going to the conference lost their lives in an air crash. The Republican Government recognised that the authorities did all they could to prevent that and tried to bring the culprits to justice. Except for that incident, things have run rather more smoothly than before 1955 when the Chinese People's Republic came to power.

As we have heard from an hon. Member in this debate, and earlier from my right hon. Friend the Member for Derby, South (Mr. P. Noel-Baker), however, Nationalist agents are busy at work on the mainland once more. This should be stamped out. I join with others who have said that if representations can be made to the United States urging them to do all possible to stop the Formosan Government from employing their agents in Hong Kong this should be done. My right hon. Friend raised the matter earlier on 5th March and the Under-Secretary replied that some cases were still under investigation. I do not know if he is in a position to add further to that statement. If so, we shall listen to him with interest.

In circumstances such as those in Hong Kong—we have to face it—there is always a threat of trouble. This reinforces the need for us to keep our garrison in Hong Kong. In connection with that, it is worth recalling that the Army last year rendered valuable help at the time of the typhoon. It provided food and shelter, material and transport, and in addition, helped to clear up the damage caused by the typhoon.

Whatever the future holds for Hong Kong, we cannot avoid recognising that geographically, ethnically and culturally Hong Kong is a segment of China, but it is also a piece of Europe which has helped to bring European culture and trade to the frontiers of China. If we can give our continued support, and if Hong Kong can continue to run its affairs as in the past, it may prove to be a more fertile and stable meeting ground for East and West than almost any other centre in the world.

2.48 p.m.

The Under-Secretary of State for the Colonies (Mr. Nigel Fisher)

I am glad that the hon. Member for Middlesbrough, West (Dr. Bray) initiated this debate today. I am very grateful for the constructive way in which he and other hon. Members including the right hon. Member for Middlesbrough, East (Mr. Bottomley) have approached this subject. I am sure that it is a good thing for the House of Commons to take an interest in places for which the Colonial Office, and, therefore, ultimately the House of Commons, is still responsible.

This is one of the occasions when I feel that back benchers have rather the edge an the Front Benches. I am very conscious of the fact that every hon. Member who has taken part in this debate, except the right hon. Member for Middlesbrough, East and myself, knows Hong Kong. We have not yet had the pleasure of visiting it. I hope that we shall have the chance of doing so before long.

My hon. Friend the Member for Richmond, Surrey (Mr. A. Royle) was certainly right in saying that a great many people are most keen to go there nowadays. Tourist traffic to Hong Kong is now quite a big thing. Hardly a week goes by in which I do not have to write a letter to the hospitable—but, I think, long-suffering—Governor asking him to entertain or give hospitality to someone who wants to go there. The amount of traffic is extraordinary. Hon. Members, whether on the Government or the Opposition side of the House, and whether they know Hong Kong or not, are all agreed on one thing—that this is a remarkable Colony. Its story is a success story if ever there was one. I find that even Treasury Ministers smile with approval when I mention Hong Kong, because it is one of the few Colonies which does not make large demands on the British taxpayer.

Many points have been made in this debate and I shall take them individually rather than make a set speech in reply. The most important general theme of the debate has been industry and trade because, of course, Hong Kong lives by trade and industry, as, indeed, we do. She has no natural resources and can only support her very large population by her industrial activities. I am quite sure, from all that I have been told, that the hon. Member for Ashton-under-Lyne (Mr. Rhodes) is quite right about this: there has been really remarkable industrial progress in recent years. But, of course Hong Kong has to find and maintain markets far this increased production, and that is the main problem.

She had what was traditionally an entrepôt economy; but owing to her increase in population and the decline of her re-export trade, Hong Kong has been compelled to expand other sections of her economy and especially her manufactur- ing industry. In 1962, there were over 7,300 registered factories, employing about 300,000 people, three times as many as ten years ago. That is quite good, but the problem is that 40 per cent. of the population is under 15 years of age and this means a very large increase in the labour force in the next few years. I think that an increase of about 25 per cent. is anticipated by 1967.

I am advised by the Governor that exports must expand by at least 10 per cent. a year if widespread unemployment is to be avoided. That rate of expansion was, in fact, achieved in 1962. But it is, of course, very difficult to secure the expansion of exports when there is always increasing pressure from outside, as we know—and I know the hon. Gentleman's special interest—to restrict Hong Kong's access to overseas markets. One can understand that because it is in the interests of the domestic producers, and we are very much concerned in it.

At the moment, exports of textiles to this country are governed by the voluntary "Lancashire Agreement", but there is this pressure from other countries, as we know—from the United States, Western Germany, Norway and Sweden—and these requests for restraint are very unwelcome to Hong Kong. But she is anxious to preserve her well-deserved reputation for being co-operative and helpful about this, and she will do her best, I know, to meet these requests; but, naturally, they are not particularly welcome to her.

I recognise, and I am sure that Hong Kong recognises, the weakness and danger of her dependence upon the exports of the textile and clothing industries, which were 52 per cent. of all her domestic exports in 1962, and also her dependence on a few major markets such as ourselves and the United States. I believe that there is a growing realisation in Hong Kong that she really needs to diversify her production and to open up new markets. For that reason, there is a concentration on trade promotion in the areas where the Colony's trade is relatively underdeveloped at the moment, because it is hoped by opening up these markets to lessen the present dependence of Hong Kong on her export trade with the United Kingdom.

I think that that is wise. But I should say that a trade mission, sponsored by the London and Birmingham Chambers of Commerce, visited Hong Kong last year and produced a useful survey of new import and export opportunities. Of couse, facilities for trade promotion already exist through the Hong Kong Government Office in London and the United Kingdom Trade Commissioner in Hong Kong.

On the particular point about China, to which the right hon. Member for Middlesbrough, East devoted a good deal of his speech, I do not think that Hong Kong is likely to neglect her opportunities for expanding trade and activities between the two countries, and I think that she would very much welcome increased trade with China. In 1962, the Colony imported £75 million worth of goods, chiefly foodstuffs, from China, amounting to 18 per cent. of her total imports. But Hong Kong's exports to China in 1962 were valued at only £5.3 million, which is only a fraction of her total exports and, indeed, of her prewar exports to China; aid re-exports accounted for £4.8 million of the £5.3 million.

As hon. Members know, the Chinese Vice-Minister for Foreign Trade is just concluding a visit to this country and it is too early to be precise as to what will result from the visit and about the prospect for increased trade between China and the United Kingdom. But if there is a part which Hong Kong can play in advancing that trade, I am sure that the services and facilities which Hong Kong has to offer will be readily available, and, certainly, we should encourage her to take that line, and that Hong Kong also, if China so wishes, will take up any opportunities to increase trade on her own account. The hon. Gentleman made some new suggestions,—very interesting to me and, I think, to my office—on this theme and going somewhat beyond it, and I shall certainly have these examined.

The hon. Member for Farnworth (Mr. Thornton) mentioned labour conditions in industry, minimum age for employment and the conditions for women and young people. That of course, is under statutory control. Night work for women, as the hon. Member knows, is prohibited and in the factory regulations made in 1959 there have been improvements in this field both on maximum hours, conditions, and so on for women and young people.

I take the hon. Member's point that in introducing these regulations the Government of Hong Kong said that they were the first steps towards improving the standards of employment and bringing hours of work more into line with internationally accepted standards. It may well be that a further advance should now be made, and in response to the hon. Member I shall certainly inquire into the intentions of the Hong Kong Government about this, and perhaps we could have a word together later when I know more about it.

The right hon. Gentleman mentioned the trade unions. They are all required by law to register and with very few exceptions I believe that the trade unions are affiliated to one of two local federations. There is one, the Hong Kong Federation of Trade Unions, which has the support of 91 unions, and another, the Hong Kong and Kowloon Trade Union Council, which, I believe, has the support of 108 unions, but I am told that the membership of the Federation is actually a great deal larger than that of the T.U.C.

From the employers' point of view, the inter-union rivalry, coupled with the failure of unions to get down to genuine industrial activity has created some difficulties in the matter of recognition; but I know that there are a number of employers who are reluctant to negotiate conditions of employment with trade unions—and that I very much regret. The Labour Department in Hong Kong actively encourages the development of collective bargaining. I am glad that the point has been mentioned today, because I will follow it up.

The hon. Member for Ashton-under-Lyne referred to the extension of the franchise and said that we should be a little cautious about this. There may be a great deal of wisdom in his advice. The right hon. Gentleman made a point about the town council, and I would inform him that eight of the 16 members of that council are elected, which is, perhaps, not as many as could be the case. The franchise is fairly wide and includes everyone qualified for jury service, teachers, taxpayers, and members of the defence and auxiliary forces.

I am advised that at the moment there is no general demand for broader representation. I am, however, conscious that the last Government announcement on the constitutional position and on representation was made by Lord Perth in Hong Kong in 1960, three years ago, when he was Minister of State. If the right hon. Gentleman could give me any evidence—I do not know whether he has any—that there is a widespread demand locally for a change, I will certainly have another look at the question. But I have no advice myself to that effect.

Dr. Bray

Will the hon. Gentleman consider the further point about the way in which the machinery is used and the type of nominations made by the Government, not to the urban council but to the Legislative Council?

Mr. Fisher

I will certainly consider that point, and I thank the hon. Member for mentioning it.

Reference was made to an independent television service. There has been a closed-circuit television system operating in Hong Kong since 1957 by a private company called Rediffusion Hong Kong Ltd., under a franchise. As far as I know there has been no decision about the introduction of an additional television service—which covers the point which, I think, the right hon. Gentleman had in mind.

The right hon. Gentleman also mentioned the case of Chan Kin Kin. He was arrested in connection with the round-up of a K.M.T. sabotage group. He was held for 13 days for questioning and then released. He is reported to have made allegations about ill-treatment by the police and about conditions in detention centres. These allegations were publicised in the Hong Kong Tiger Standard. The allegations are now the subject of an inquiry by a commission set up by the Governor for the purpose, and, in effect, they are sub judice, and I would prefer not to comment further on them. But they lead me to the point made by my hon. Friend the Member for Richmond, Surrey and referred to by the right hon. Gentleman concerning the sabotage activities from Formosa.

I very much deplore the fact that Hong Kong should be used as a base for this sort of activity. The Prime Minister in- formed the House as long ago as 14th February, in reply to a Question, that we are doing our best to stop this, and I believe that he answered another Question on the subject today. Unfortunately, I was not here at the time and I do not know what he said, and I do not wish to say something totally different. I will answer only on the departmental side, with which I can deal.

I do not want to be drawn into a discussion about the powers of the United States, which have nothing to do with me. The Government of Hong Kong are considering the prosecution of those implicated in such activities. I do not want to go into details, but hon. Members will take the point that security considerations have to be taken into account. One often gets better results if one does not publicise the fact that one has caught someone. I do not want to elaborate that.

Mr. P. Noel-Baker

I, too, want to look again at what the Prime Minister said today, but I think that it was more forthcoming than it has been in the past. May I suggest to the right hon. Member that he should get the Foreign Office to obtain a transcript of all that has passed in the House of Commons, and all that has been said by hon. Members on this point, and should see that it reaches Mr. Dean Rusk and President Kennedy.

Mr. Fisher

That is a very constructive suggestion. This is not a party matter. We are all concerned about it.

I am glad that my right hon. Friend was more forthcoming, but as I did not hear what he said I had better not enlarge on it. I will certainly draw the Foreign Secretary's attention to the right hon. Gentleman's observations: what he suggested might be helpful. Nobody could resent the production of comments made publicly in the House with the request that they should be considered.

The right hon. Gentleman asked me to say something about the education and health services. A fair measure of the overall success of the public health services since the war is the fact that, in spite of heavily overcrowded conditions, no serious epidemic has occurred at any time. I am, however, concerned about the hospital bed provision. As the right hon. Gentleman knows, there has been a great expansion, but I still do not think that the provision is completely adequate. In 1949, there were 11 Government hospitals in Hong Kong with a total of 1,750 beds and a further 2,000 beds or more in Government-assisted and private hospitals, making nearly 4,000 beds.

By the end of 1962 this had risen to 14 Government hospitals with nearly 3,500 beds, and additional hospitals, Government assisted, provided a further 4,500 beds, making a total available, including private institutions, of over 10,000 beds. I do not claim that even this is anywhere near adequate, but a large new general hospital will very shortly be completed. That will have a further 1,300 beds or more and will cost £4 million. The expenditure in 1961–62 on medical services was over £9 million. It is not as though nothing is being done.

A similar situation applies in education, the main problems being the provision of primary education for all children and secondary education for as many children as possible. In January of this year the Hong Kong Government announced plans for a new seven-year primary course, which will mean that the minimum age of entry will be 7 years and the leaving age will be raised to 14 years. I do not claim that this is perfect, but it is better. The last two years of this course will be in the nature of secondary education.

The House may like to know that the County Education Officer and the County Treasurer of the Hampshire County Council are at present in Hong Kong conducting an inquiry into the overall educational needs of the Colony and what they think should be the most practical way of filling those needs. I hope that this will produce something useful. In any case, total expenditure on education last year represented 15.7 per cent. of the whole of Government expediture. Expenditure has again been very substantially increased for 1962–63.

It is also hoped to make a start this year on establishing a second university in Hong Kong. I think that progress is being made and a good deal is happening in education, although I certainly do not want to appear complacent about it, because, good as Hong Kong is, no place is perfect, not even Hong Kong and there are many improvements, particularly in the social field, which could be made.

There have been many points to answer and I am afraid that I have been rather bitty and disjointed in jumping from one to another instead of making a more cohesive speech. I do not think that I have trespassed on anybody else's time, because we lost ten minutes or a quarter of an hour of our time at the outset. Therefore, I do not feel unduly guilty. If, due to lack of time, I have not covered all the points made in the debate I will certainly write to any hon. Member on any matter that I have omitted to deal with.

I only wish that we could have had a longer debate, but I am sure that Hong Kong will appreciate the very constructive interest which hon. Members have shown today in the problems and the wellbeing of the Colony. This debate is very much more important in Hong Kong than it is in the British House of Commons. I have certainly very much appreciated the opportunity which the hon. Member for Middlesbrough, West has given the House, because it has forced me to do a litle homework on a Colony which I do not know.

It has also made me very keen—I am sure that the right hon. Member for Middlesbrough, East feels the same—to visit Hong Kong and see at first hand a Colony which, I think, by common consent and general agreement in the House today, has been remarkable in that by efficient administration and sheer hard work it has solved many very tough problems in a very praiseworthy manner.