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China, Hong Kong, and the Long 1970s: Global Perspectives pp 233–255Cite as

Palgrave Macmillan

1967 as the Turning Point in Hong Kong–British–PRC Economic Relations

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Part of the book series: Cambridge Imperial and Post-Colonial Studies Series ((CIPCSS))

Abstract

This chapter elucidates some connections and similarities between the response of the British government to the 1967 Hong Kong riots and the implementation of devaluation. Each of these events marked a turning point in Hong Kong’s relations with both Britain and China. During 1967, strong disagreements emerged within the British government over future involvement in Hong Kong. While the British Department of Economic Affairs, together with British financial and business entities in Hong Kong, believed the Hong Kong–British–PRC triangular relationship benefited all concerned, the Treasury and the Bank of England harbored many more reservations over Hong Kong’s special currency status and its sterling dealings with China, which they perceived as undermining British interests. Alarmist Treasury and Bank of England interpretations of the Hong Kong riots and support for the imposition of tough emergency regulations were probably driven at least as much by eagerness to end unregulated flows of sterling via Hong Kong as by anxieties that external and internal Communist threats genuinely menaced the territory.

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Notes

  1. 1.

    CP (48) 299, December 1948, CAB 129/31, The UK National Archives [hereafter TNA], Kew, Surrey, UK; F 1331/409/10, FO 371 46232, TNA. See also Aron Shai, Britain and China, 1941–1947: Imperial Momentum (London: Macmillan, 1984), 150–151; J. T. H. Tang, Britain’s Encounter with Revolutionary China, 1949–1954 (London: Macmillan, 1992), 15–16; and Maurice Collis, Wayfoong: The Hongkong and Shanghai Banking Corporation (London: Faber and Faber, 1965), 243.

  2. 2.

    Susan Strange, Sterling and British Policy: A Political Study of an International Currency in Decline (New York: Oxford University Press, 1971), 112–116. For a description of the Hong Kong monetary system, see also Catherine R. Schenk, “Banks and the Emergence of Hong Kong as an International Financial Center,” Journal of International Financial Markets, Institutions and Money 12:4–5 (February 2002), 321–340.

  3. 3.

    Strange, Sterling and British Policy, 114–116.

  4. 4.

    Leo Goodstadt, Profits, Politics and Panics: Hong Kong’s Banks and the Making of a Miracle Economy, 1935–1985 (Hong Kong: Hong Kong University Press, 2007).

  5. 5.

    Catherine R. Schenk, “The Banking and Financial Impact of the 1967 Riots in Hong Kong,” in May Days in Hong Kong: Riot and Emergency in 1967, eds. Robert Bickers and Ray Yep (Hong Kong: Hong Kong University Press, 2009), 105–126.

  6. 6.

    Schenk, “Banks and the Emergence of Hong Kong.”

  7. 7.

    In 1964 the working report Review of Policies for Squatter Control, Resettlement and Government Low Cost Housing was published. See Alan Smart and Tai-lok Lui, “Learning from Civil Unrest: State/Society Relations in Hong Kong before and after the 1967 Disturbances,” in May Days in Hong Kong: Riots and Emergency in 1967, eds. Robert Bickers and Ray Yep (Hong Kong: Hong Kong University Press, 2009), 147–148.

  8. 8.

    Confidential Trench to Carter (C.O.), May 26, 1966, CO1030/1747, TNA; Confidential, “Memorandum of reference for use by Counsel representing the Government,” May 25, 1966, CO1030/1746, TNA; Secret From the Governor of Hong Kong to the Secretary of State for the Colonies: Kowloon Riots, April 15, 1966, FCO 40/39/, TNA; and Hong Kong Government, Kowloon Disturbances 1966: Report of Commission of Inquiry (Hong Kong: Hong Kong Government Printer, 1967), 1–167.

  9. 9.

    South China Morning Post (December 7, 1965).

  10. 10.

    Alexander Eckstein, China’s Economic Development: The Interplay of Scarcity and Ideology (Ann Arbor: University of Michigan Press, 1975).

  11. 11.

    Mr. Pinner, “Director’s Report on Visit to Hong Kong and Australia, April 1st–29th, 1967,” BT 241/512, TNA.

  12. 12.

    Quoted in Wu Yiching, The Cultural Revolution at the Margins: Chinese Socialism in Crisis (Cambridge, MA: Harvard University Press, 2014), 98.

  13. 13.

    Roderick MacFarquhar and Michael Schoenhals, Mao’s Last Revolution (Cambridge, MA: Harvard University Press, 2006), 174.

  14. 14.

    Confidential Letter from T. Peters to B. MacTavish, Commercial Relations & Exports Department, Board of Trade, March 10, 1967, BT 241/512, TNA.

  15. 15.

    Huarun (Jituan) Youxian Gongwi ≪Hongse Huarun≫ Bianweihui, Hongse Huarun (Beijing: Zhonghua Shudian, 2009) [China Resources (Group) Ltd. ≪Red China Resources≫ Editorial Committee, Red China Resources (Beijing: Zhonghua Shudian, 2009)], 337.

  16. 16.

    Zhonggong Zhongyang Wenxian Yanjiushi Bian: ≪Zhou Enlai Nianpu Yijiusijiu – Yijiuqiliu≫ Xia Zhuan, 1997 [Central CCP Committee Document Research Unit, Zhou Enlai Biography, 1949 – 1976], 145.

  17. 17.

    Gary Ka-wai Cheung, Hong Kong’s Watershed: The 1967 Riots (Hong Kong: Hong Kong University Press, 2009), 23.

  18. 18.

    Lawrence Cheuk-yin Wong, “The 1967 Riots: A Legitimacy Crisis?,” in May Days in Hong Kong: Riot and Emergency in 1967, eds. Robert Bickers and Ray Yep (Hong Kong: Hong Kong University Press, 2009), 37–51.

  19. 19.

    Wong, “The 1967 Riots,” 51.

  20. 20.

    Haipeng Zhou, “Whose Sound and Fury? The 1967 Riots of Hong Kong through The Times,” Global Media Journal 4:6 (Spring 2005), http://www.globalmediajournal.com/open-access/whose-sound-and-fury-the-riots-of-hong-kong-through-the-times.pdf, accessed May 12, 2016.

  21. 21.

    David Bonavia, “Youth Dies in New Hong Kong Riot,” Times (May 13, 1967), 1.

  22. 22.

    Letter of J. B. Kite, Secretary of the Hong Kong General Chamber of Commerce, to H. E. Collar, Secretary of the Hong Kong Association, London, June 1, 1967, CHAS/C/8-10, School of Oriental and African Studies Archives [hereafter SOAS], London.

  23. 23.

    Letter of Susan Yuen, Honorary Secretary of the Hong Kong Association (Hong Kong Branch) to Hugh Collar, Acting Secretary of the Hong Kong Association in London, CHAS/C/11-13, SOAS Archives.

  24. 24.

    Report to the Hong Kong Development Council on Activities carried out by Mrs Susan Yuen in support of the Public Relations Programme, July 24, 1967, CHAS/C/11-13, SOAS Archives.

  25. 25.

    John M. Carroll, “A Historical Perspective: The 1967 Riots and the Strike-Boycott of 1925–26,” in May Days in Hong Kong: Riot and Emergency in 1967, eds. Robert Bickers and Ray Yep (Hong Kong: Hong Kong University Press, 2009), 69–85.

  26. 26.

    Steve Tsang, “Strategy for Survival: The Cold War and Hong Kong’s Policy towards Kuomintang and Chinese Communist Activities in the 1950s,” Journal of Imperial and Commonwealth History 25:2 (May 1997), 294–317.

  27. 27.

    Tel. N° 1425 From Hong Kong (O.A.G.) to the Commonwealth Office, July 18, 1967, FCO 40/54, TNA.

  28. 28.

    Tel. N° 1013 From Hong Kong (O.A.G.) to the Commonwealth Office, July 12, 1967, FCO 40/54, TNA.

  29. 29.

    Michael Share, Where Empires Collided: Russian and Soviet Relations with Hong Kong, Taiwan, and Macao (Hong Kong: Chinese University Press, 2007), 145–148.

  30. 30.

    Cheung, Hong Kong’s Watershed, 143–149.

  31. 31.

    Wong, “The 1967 Riots,” 40.

  32. 32.

    Walder, Fractured Rebellion, 15.

  33. 33.

    MacFarquhar and Schoenhals, Mao’s Last Revolution, 174.

  34. 34.

    Yao Dengshan, an officer in the Chinese Embassy in Jakarta, was expelled from Indonesia in April 1967. Wang Li became famous for a speech he delivered on August 7, 1967, in which he asked: “[W]hy can’t a 20 year-old become the Minister of Foreign Affairs?” MacFarquhar and Schoenhals, Mao’s Last Revolution, 227–228.

  35. 35.

    Barbara Barnouin and Yu Changgen, Chinese Foreign Policy during the Cultural Revolution (London: Kegan Paul International, 1998), 66–78. The only other work devoted to the study of PRC foreign relations during the Cultural Revolution has to be regarded as a testimony. Ma Jisen, The Cultural Revolution in the Foreign Ministry of China (Hong Kong: Chinese University Press, 2004).

  36. 36.

    MacFarquhar and Schoenhals, Mao’s Last Revolution, 229–231.

  37. 37.

    Barnouin and Yu, Chinese Foreign Policy.

  38. 38.

    Robert Bickers, “On not being Macao(ed) in Hong Kong: British Official Minds and Actions in 1967,” in May Days in Hong Kong: Riot and Emergency in 1967, eds. Robert Bickers and Ray Yep (Hong Kong: Hong Kong University Press, 2009), 56.

  39. 39.

    Ibid.

  40. 40.

    Cheung, Hong Kong’s Watershed, 149–154.

  41. 41.

    MacFarquhar and Schoenhals maintain that the Communist Party never devised a change of strategy, suggesting that in all probability individual leaders, such as Wang Li, encouraged the actions of the Hong Kong leftists. MacFarquhar and Schoenhals, Mao’s Last Revolution, 229–231.

  42. 42.

    Cheung, Hong Kong’s Watershed, 149–154.

  43. 43.

    Carroll, “A Historical Perspective,” 72.

  44. 44.

    David Bonavia, “No Need for More Hongkong Troops,” Times (July 19, 1967), 4.

  45. 45.

    Hong Kong to the Commonwealth Office, May 7, 1967, Telegram No. 947, FO 40/45, TNA.

  46. 46.

    Ray Yep, “The 1967 Riots in Hong Kong: The Diplomatic and Domestic Fronts of the Colonial Governor,” China Quarterly 193 (March 2008), 122–139.

  47. 47.

    Ray Yep, “Cultural Revolution in Hong Kong: Emergency Powers, Administration of Justice and the Turbulent Year of 1967,” Modern Asian Studies 46:4 (July 2012), 1007–1032.

  48. 48.

    Bickers, “On not being Macao(ed),” 64.

  49. 49.

    Secret E. J. Beaven to Mr Figgures, “China: Financial Links,” August 30, 1967, T 317/902, TNA; and Mackay to Mr Figgures F(E) Division 22, “China and Hong Kong,” September 4, 1967, T 317/902/A, TNA.

  50. 50.

    D.W. Russell C.O. Dependent Territories Division Secret, T 317/902/Ministry of Defence/23/145/01, TNA.

  51. 51.

    Secret E. J. Beaven to Mr Figgures “China: Financial Links,” August 30, 1967, T 317/902, TNA.

  52. 52.

    Mr A. K. Rawlinson to Mr Hubback, “Hong Kong,” February 7, 1967; Secret D.M.F.R. to Mr Armstrong, February 16, 1967; Top Secret Note of a Meeting held in the Chancellor’s Room, Treasury Chamber, Tuesday 21st February 1967 at 2.30 P.M., “The Hong Kong Gap”; Mr A. K. Rawlinson to Sir Denis Rickett, “Hong Kong,” March 8, 1967; Top Secret Mr D. F. Hubback to Mr Goldman, “Blocking sterling balances held indirectly on behalf of Middle East beneficiaries,” July 14, 1967; and Top Secret Mr Hubback to Mr Goldman, July 28, 1967, T295/240, TNA.

  53. 53.

    C. R. Schenk, “The Empire Strikes Back: Hong Kong and the Decline of Sterling in the 1960s,” Economic History Review, n.s. 57:3 (August 2004), 551–580.

  54. 54.

    The documents cited and discussed hereafter are from the British National Archives, T295/240, and the Bank of England Archives, OV44/258.

  55. 55.

    The David Davies Memorial Institute of International Studies, “Case Study of Disturbances in Hong Kong,” 1967, FCO 40/39, TNA.

  56. 56.

    Top Secret “Note on a Meeting in Mr Hubback’s Room, 2nd Floor, Treasury Chambers, Great George Street, SW1, on Friday 15th September 1967, at 10.15 a.m.,” T 295/240/, TNA. Attending this meeting with Cowperthwaite were D.F. Hubback, A. K. Rawlinson, S. H. Wright, and A. R. H. Glover of the Treasury, H.P. Hall of the Commonwealth Office, and E. P. Haslam of the Bank of England.

  57. 57.

    Bickers, “On not being Macao(ed),” 65.

  58. 58.

    Haslam’s Report from Hong Kong, Telegram No. 831, November 22, 1967, OV 44/258, Bank of England Archives, London [hereafter BoE].

  59. 59.

    Schenk, “The Empire Strikes Back,” 569–570.

  60. 60.

    Haslam’s Report from Hong Kong, Telegram No. 831, November 22, 1967, OV 44/258, BoE.

  61. 61.

    Schenk, “The Empire Strikes Back,” 551–580.

  62. 62.

    Shanghai shi Qinggongye ju Guangjiaohui Xiaozu yu 1967 Nian Qiuhui Qingkuang Huibao [Shanghai Light Industry Bureau, Small Group on the Canton Fair 1967, Report on the Autumn Edition] Shanghai Municipal Archives B163-4-33-86.

  63. 63.

    Ibid.

  64. 64.

    Letter from Collar to Yuen, December 5, 1967, CHAS/C/11-13, SOAS Archives.

  65. 65.

    Patrick Yeung, “Trade Ties between Hong Kong and Mainland China,” Asian Survey 10:9 (September 1970), 822–824.

  66. 66.

    Susan Strange and Benjamin Cohen were the first to note that Hong Kong obtained these concessions. Strange, Sterling and British Policy; and Benjamin J. Cohen, The Future of Sterling as an International Currency (London: Macmillan, 1971). For analyses of Hong Kong’s role in the renegotiation of imperial monetary relations following the 1967 devaluation, see Schenk, “The Empire Strikes Back”; and Goodstadt, Profits, Politics and Panics.

  67. 67.

    By September 1968, the Bank of England had concluded agreements with 30 countries which together held about 77 percent of official sterling-area sterling reserves. This was a crucial step in avoiding a massive move toward reserves diversification by the sterling-area countries, which could have had a detrimental impact on British foreign exchange reserves. Gianni Toniolo and Piet Clement, Central Bank Cooperation at the Bank for International Settlements (Cambridge: Cambridge University Press, 2005), 423–424.

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Authors and Affiliations

  1. Department of International History, London School of Economics and Political Science, London, United Kingdom

    Valeria Zanier

  2. Center for Global History and Politics, Università Ca’Foscari Venezia, Venice, Italy

    Roberto Peruzzi

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  1. Valeria Zanier
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Correspondence to Valeria Zanier .

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  1. City University of Macau, Taipa, Macao

    Priscilla Roberts

  2. Harvard University, Cambridge, Massachusetts, USA

    Odd Arne Westad

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Zanier, V., Peruzzi, R. (2017). 1967 as the Turning Point in Hong Kong–British–PRC Economic Relations. In: Roberts, P., Westad, O. (eds) China, Hong Kong, and the Long 1970s: Global Perspectives. Cambridge Imperial and Post-Colonial Studies Series. Palgrave Macmillan, Cham. https://doi.org/10.1007/978-3-319-51250-1_10

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