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Going out
Going out under the shadow of Red under the
China: the geopolitical origin of shadow of
Red China
Hong Kong’s international status
Chi Keung Charles Fung and Chi Shun Fong 173
Department of Government and Public Administration,
Received 12 February 2018
The Chinese University of Hong Kong, Hong Kong Revised 28 June 2018
Accepted 28 November 2018

Abstract
Purpose – Many scholars would agree that the international status of Hong Kong is one of the crucial
factors that contribute to the continued success of Hong Kong. However, few of them explain the origin of
Hong Kong’s international status. The purpose of this paper is to fill this literature gap through the case
study of Hong Kong’s admission to an international organization – the Asian Development Bank (ADB) – in
the late 1960s.
Design/methodology/approach – Based on declassified archives, a historical approach has been adopted
to trace the origin of Hong Kong’s international status.
Findings – The findings suggest that Cold War geopolitics, both local and regional level, explain why Hong
Kong, even though remained as a dependent territory of Britain, became a member of an international
organization independent from the British influence. While geopolitics at local level incentivized the colonial
government to “go out” for external support, geopolitics at the regional level provided an opportunity for
Hong Kong to acquire membership of the ADB.
Originality/value – This paper is among the first academic study on the origin of Hong Kong’s
international status.
Keywords Cold war geopolitics, Asian development bank, International status of Hong Kong
Paper type Research paper

Introduction
As a non-sovereign territory, colonial Hong Kong was expected to be subordinate to the
sovereign power over it. Surprisingly, the colony gained memberships in many international
and regional organizations, more than any other non-sovereign government (Kim, 2007;
Tang, 1993), and acted quite independently in the international arena. This capacity of
“participating in multilateral organization and agreements,” as suggested by Neves (2000,
p. 288), “is a fundamental part of Hong Kong’s international status.” Indeed, regarding the
international status of Hong Kong, Ting and Lai (2012, p. 266; also see Ting, 1997) argued
that Hong Kong’s international status did not only facilitate the “proper functioning of the
socio-economic system of Hong Kong,” but also served the national interests of China by
extending its trading networks. In their views, Hong Kong, with its external relations,
served as a useful middleman between China and the western world, which furthered the
economic interests of both the Hong Kong Special Administrative Region and the People’s
Republic of China (PRC). The problem challenging this competitive edge of Hong Kong in
the post-handover period, as Ting and Lai (2012, p. 279; also see Smith, 2001) suggest, is
whether Hong Kong can maintain its international appeal to western countries if it is being
“provincialized” by the PRC Government. This anxiety, of course, echoes the worry
expressed by Chan (1997) that Hong Kong’s retrocession after 1997 would limit the external
relations it has already enjoyed. The discussion in the literature, however, often proceeds
without questioning how and under what conditions Hong Kong gained its international
Asian Education and Development
status (e.g. Hook and Neves, 2002; Shen, 2016; Weng, 1997). Studies
To address this gap in the literature, this paper employs declassified archival materials Vol. 8 No. 2, 2019
pp. 173-185
from The National Archives of the United Kingdom and Government Records Service of © Emerald Publishing Limited
2046-3162
Hong Kong to trace the process of how colonial Hong Kong became a member of the Asian DOI 10.1108/AEDS-02-2018-0033
AEDS Development Bank (ADB) within the context of Cold War. Traditionally, archival studies
8,2 have been regarded as the “prerogative of academic historians” (Burnham et al., 2004,
p. 168). Nevertheless, it is of great value for political scientists to study through archives,
which are primary sources “intended for internal or restricted circulation only” and “facts in
themselves” (Burnham et al., 2004, p. 165). Recently, with the declassification of archival
materials, a bunch of scholarly works on the politics of postwar Hong Kong has been
174 produced (see Lee, 2014; Mark, 2000, 2004, 2007, 2014; Share, 2007; Smart, 2006, also see the
following session). Their works inspire the authors to study lately declassified archival
materials and provide invaluable insights into this research.
Through reading correspondence, reports and internal dispatches of the colonial
government and the British Government, we argue that Cold War geopolitics were crucial in
explaining why Hong Kong became a partly independent actor in the international arena in
the 1960s. The findings suggest that while the grand Cold War geopolitical configuration
offered a window of opportunity for the colony to gain membership the ADB, Cold War
geopolitics at local level, manifested as the threat to the colony’s survival posed by the
Chinese Communist Government, incentivized the colonial government to seek external
financial assistance for its countermeasures and increase its international status, which
eventually accomplished by joining the ADB.
To avoid being merely descriptive but enhance the rigorousness of this analysis,
we follow other historical-oriented political scientists and use within-case method as this
single case study’s research design (Lange, 2013). Making comparison is crucial, especially
to those that could not offer more than one case, because it allows scholars to tease out the
temporal effect(s) and the “causal ordering” of how one particular factor leads to another
as the causal chain unfolds (Lange, 2013, p. 71). We divide the case using before and after
treatment to illustrate how the temporal effect of the geopolitical threat of the 1967 riots and
the announcement of soft loan practice by the ADB led to the change of attitude of the
colonial government toward the membership issue. As one will see in the coming sections,
the colonial government was indeed aware of the geopolitical threat, especially the
potentiality of the Chinese Communist Government’s use of water supply as political
leverage, and the ADB came into existence before 1967. However, the colonial government
was not enthusiastic in gaining the membership of the ADB. Only when the occurrence of
the 1967 riots led to a severe loss of business confidence in Hong Kong, and this confidence
issue causally coincided with events including the risk of relying on Chinese water
supply and the ADB’s announcement of its soft loan policy, the colonial government
rapidly changed its orientation toward the membership issue. In this way, we reveal
how geopolitical factor, under what context, at which level and by what events, leads to
Hong Kong’s joining of the ADB.
The main body of this paper consists of four parts. It first reviews recent developments
in Cold War studies on East Asia and Hong Kong and explains the significance of
geopolitics to the development of Hong Kong. Then, this paper explores how the geopolitical
situation affected the colonial administrators’ consideration of Hong Kong’s internal
security and created fiscal problems that induced them to seek external support. Finally,
this paper reveals how the broader geopolitical configuration in the 1960s offered a window
of opportunity for the Hong Kong Government to acquire membership of the ADB, which
helped resolve its internal security and related fiscal problems. We conclude this paper by
proposing some future research questions that could shed lights on colonial Hong Kong and
its external relations.

The Cold War in East Asia and Hong Kong

Since Westad’s (2005) award-winning work The Global Cold War, scholars have recognized
that previous understandings of the Cold War are seriously inadequate and the strategic
interactions and rivalries between the USA and the Soviet Union had tremendous impacts Going out
on other countries. During the Cold War, East Asia was highly contested by the great under the
powers, and Cold War geopolitics affected the developmental trajectory of states in the shadow of
region (Hasegawa, 2011). For example, Stubbs (2005) argues that the “East Asian Miracle,”
in fact, resulted from Cold War geopolitics and US geo-strategies. To facilitate economic Red China
development in East Asian states, the USA poured economic aid into the region and opened
its markets to their merchandized products. The aim of this assistance was to contain the 175
spread of communism in East Asia by stimulating economic growth.
Stubbs is not the only scholar to revisit the history of the Cold War in East Asia.
Recently, many have reconsidered how Cold War geopolitics influenced Hong Kong as well.
To name a few, Lee (2014) explains that Hong Kong’s geopolitical vulnerability affected its
development of an independent and local water supply system. Airriess (2005) investigates
how colonial government-sponsored farming activities during the Cold War helped deter
communist penetration and guaranteed the local food supply. Smart (2006) debunks the
Shek Kip Mei Myth, the official story of public housing, and suggests that the provision of
resettlement estates for squatters in the 1950s was motivated not by humanitarian reasons
but by the need to maintain the colony’s internal security against possible Kuomintang
(KMT) or communist-led subversion. These analyses do not simply confirm the finding of
Mark (2000, 2004, 2007, 2014; also see Roberts, 2016; Share, 2007) that postwar Hong Kong
was deeply engaged in the Cold War; moreover, they demonstrate the Cold War’s influence
on local colonial policies.
As Roberts (2016, p. 16) argues, “the Cold War was a distinct and crucial period in its own
evolution and in its relations with China and the rest of the world […]. Economically,
intellectually, socially, and culturally, the Cold War years were crucial in ensuring that
Hong Kong became a unique and cosmopolitan metropolis.” Certainly, the studies discussed
here do not exhaust the whole subject of Hong Kong in the Cold War, but they do clearly
reveal that the colonial government perceived the local colonial setting as reflecting the
broader geopolitical contestation of global powers, and was always conscious of its
vulnerability under the geopolitical pressure from Communist China when making policies
and decisions. That is why it is necessary to understand how Cold War geopolitics affected the
local colonial state actors after the Chinese Communist Government came to power in 1949.

Military indefensibility and the internal security of Hong Kong in the Cold War
Known as the “Berlin of the East” (Mark, 2000, p. 839), postwar Hong Kong became deeply
engaged in the Cold War, especially after the establishment of the Chinese Communist
regime in 1949 and the subsequent outbreak of the Korean War (Louis, 1997; Mark, 2004;
Tsang, 1997). Indeed, the Hong Kong and British Governments were not unprepared for this
change. In March 1946, the Defence Committee in London had anticipated the military
consequences for the colony if the Chinese Communist Party (CCP) defeated the
Kuomintang government in the Chinese civil war. Regarding possible CCP aggression,
analysts concluded that they did “not consider [that] under modern conditions, Hong Kong
can be defended against attack by a major power in occupation of the Chinese mainland”
(Ashton et al., 2002, p. 41).
Knowing that the colony could not be retained by military measures, the British
Government decided that, to “keep a foot in the door” of China and maintain British
economic interests and regional influence in the Far East, it could not give away the colony
voluntarily (Ashton, 2004). To defend the military indefensible colony, analysts
recommended ensuring its internal security, which could “act as a deterrent against
Chinese guerrilla incursions” (Ashton et al., 2002, p. 41). Although the CCP decided not to
take over Hong Kong through military measures, the colonial administrators concluded
that its internal security remained at stake (Loh, 2010; Mark, 2004; Share, 2007).
AEDS In particular, the colonial administrators saw the influx of refugees from the mainland
8,2 as a paramount political problem (Mark, 2007, p. 1146), imposing a heavy burden on the
colony. Even worse, Hong Kong became a battleground where the CCP and the KMT
competed for the loyalty of local Chinese residents through proxy agents and organizations
in the colony (see, e.g. Wong (2002), Chou (2012) and Tsang (1997) for the discussion on how
the rivalries between the KMT and CCP affected colonial policy making). Their rivalries, in
176 the view of the colonial administrators, posed a serious political risk because they
“constituted a threat to stability and could have a cumulative effect in undermining British
rule” in Hong Kong (Tsang, 1997, p. 298). This threat became especially real when their
rivalries led to the Double Tenth riots in October 1956, an event that “added a political
dimension to the Chinese refugee problem, highlighting the importance of turning potential
trouble-makers into responsible residents through local integration in the fullest sense”
(Mark, 2007, pp. 21-22).
Consequently, a series of projects were planned by the colonial government to maintain
the colony’s internal security, including expanding the water supply system and developing
agricultural and fishing facilities, low-cost housing and a new (Chinese) university (Airriess,
2005; Lee, 2014; Mark, 2007; Smart, 2006; Wong, 2002). The aim was to neutralize the
influence of (primarily) the CCP and the KMT forces in the colony by integrating the
refugees into local colonial society. As a “practical form of social defense,” these projects
were seen as essential strategies for the colony’s political survival because they could deter
CCP’s aggression, neutralize the influence of the external powers over the colony and
maintain the internal security necessary to achieve social stability (Mark, 2007, p. 1165).
These social defense measures complemented the CCP’s policy of acquiring foreign currency
through Hong Kong (Mark, 2014), which required a stable business environment. With such
social defense measures, Hong Kong maintained its role as a trading center benefitting itself
and the Communist China, supplying it with hard currency (Mark, 2007, 2014).

Seeking external financial resources and the acquisition of the Asian

Development Bank’s membership
In the 1960s, building a self-sufficient water supply system became a top priority of the
colony. Although the colonial government built a giant reservoir in Tai Lam Chung in 1957
and spent more than 10 percent of their public expenditure on water supply in the 1960s (e.g.
the total public expenditure of the Hong Kong Government in the 1965/1966 financial year
was HKD1,769.1m, of which 12.5 percent (HKD221.4m) was spent on water supply, see Lee,
2014), acute water shortages still occurred in the 1960s due to another wave of refugees’
influx in 1959 and a series of droughts (Hampton, 2016; Hong Kong Government, 1961;
Lee, 2014). While the colonial government started to import water from the Shenzhen
Reservoir in the early 1960s as a remedy, Governor Robert Black realized that over-reliance
on Chinese water could undermine the Hong Kong Government’s authority and
Hong Kong’s internal security, if the CCP attempted to pressure the colony by
withholding water supply (Lee, 2014, p. 909). This worry was materialized during the 1967
riots when the colony’s water supply became “dangerously low” due to low rainfall levels,
and the Guangdong authorities ignored the colonial government’s request to increase the
water supply (The National Archive, UK (hereafter TNA), FCO40/103, May 16, 1968).
Although the Chinese water supply resumed in October 1, 1967, the colonial government
realized that “there remains the possibility that they [the CCP] may cut off [water] supplies
completely” and that local leftists could exploit the water shortage problem to support the
anti-colonial opposition and undermine law and order in the colony (TNA, FCO40/103; Lee,
2014, p. 912). To neutralize the CCP’s leverage over the water supply, the colonial
government decided to strengthen and ultimately make the local water supply system
self-sufficient through a seawater desalination project (Lee, 2014). However, amid continual
failures to reform the tax system due to opposition from local business elites (Littlewood, Going out
2010), the colonial government’s preference for conservative fiscal policy and the loss of under the
much of Hong Kong’s fiscal surplus during the 1967 devaluation of the pound sterling, shadow of
the colonial administrators judged the availability of financial resource to be limited,
given that a significant portion of public expenditure had been spent on water supply (TNA, Red China
FCO40/103, May 16, 1968).
Coincidentally, the broader geopolitical configuration in the early 1960s provided an 177
opportunity for the Hong Kong Government to solve this financial problem. The
deteriorating geopolitical situation in Indochina (the onset of the Vietnam War) prompted
the USA to try new approaches to combat the communist movement, including stimulating
economic and technical growth to stabilize non-communist governments (Nguyen, 1999,
pp. 85-86). Against this background, a plan to establish a multilateral development bank in
the Far East, which became known as the ADB, was put on the agenda of the United
Nations Economic Commission for Asia and the Far East (ECAFE), although it had dropped
a similar plan in 1954 due to a lack of enthusiasm among members (Dutt, 2001, p. 242;
Foreign Relations of the United States (hereafter FRUS), Document 61).
In 1963, U. Nyun, the Executive Secretary of the ECAFE, called a special meeting to
discuss the possibility of establishing a regional bank (also see Dutt (2001) for an analysis of
the origin of the ADB and how the Bank fit into US geo-strategy during the Cold War). This
time, most member countries of the ECAFE supported the measure to promote regional
financing and foster rapid economic growth (Hong Kong Record Series (hereafter HKRS),
163/1/2614, December 12, 1963). The ECAFE then passed a resolution agreeing to “get
together on common problems so that ‘the voice of Asia should be heard’ and to develop a
common approach with developing countries in other regions” (HKRS, 163/1/2614).
The Hong Kong Government’s ECAFE representative, R.M. Hetherington, reported that
“Hong Kong must be clear on the line to be taken at future meetings” (HKRS, 163/1/2614).
However, the Hong Kong’s admission into the ADB was not as smooth as expected, notably
due to its colonial status. First, it aroused the suspicion, if not the criticism, from other members
of the ADB. As Hetherington remarked, “the Philippines referred more than once to ‘sovereign
government of the ECAFE region,’ ” (HKRS, 163/1/2614) and in his view, the Philippines was
dissatisfied that Hong Kong, as a member of the ECAFE, was not a sovereign government but
a British colonial territory. Further complicating this issue, the admission of Hong Kong would
increase British influence in the ADB as Hong Kong would presumably act under Britain’s
directive (South China Morning Post, April 13, 1969). Second, Hong Kong’s admission would
place an additional financial burden on the British Government. According to the charter of the
ADB, Hong Kong, as a dependent territory, had to seek financial guarantees from its sovereign
government. It could lead to unforeseeable financial consequences, a “blanket undertaking,” for
the British Government, which were “not welcome[d]” to the Whitehall (TNA, FCO24/240,
March 20, 1968). Even worse, it might open room for application from other dependent
territories of Britain. Therefore, it would not be difficult to understand why Lord Shepherd, the
Minister of State at the Foreign and Commonwealth Office (FCO), told the colonial authorities
and local business associations during his visit to Hong Kong in October 19, 1967, that, given
“Hong Kong’s strong financial position and its substantial reserves,” it was unlikely to receive
loans from the ADB and the World Bank (HKRS, 1462/1/306, October 19, 1967).
Therefore, when the Bank was about to open in late 1966, the colonial government was
not enthusiastic to apply for its membership and the British Government was not eager to
get Hong Kong into the ADB (South China Morning Post, December 3, 1965). As a dependent
territory of Britain, Hong Kong was expected to continue to obtain “loans for major
development” from Britain (South China Morning Post, December 7, 1965). Then, why
(and how) did Hong Kong acquire the membership of the ADB eventually? To reveal
Hong Kong’s uneasy admission, we must look closer into its admission process.
AEDS Becoming a member of the ADB independent from the British
8,2 Again, geopolitical considerations propelled the “Free World” to pay more efforts to contain
communism in East Asia and thus opened a window for Hong Kong’s admission. In late
1966, Eugene Black, the Special Adviser to the ADB, former President of the World Bank
and Advisor to US President Lyndon Johnson, declared that the Bank would offer soft loans
to finance regional projects (China Mail, December 8, 1966; see also, Sneddon (2012) for a
178 discussion on US technical and financial support to the dam projects in Southeast Asia since
the 1950s). As Black later explained to Walt W. Rostow, Special Assistant to the US
president, these soft loans would fund regional projects to counter communist insurgencies
within the vulnerable Southeast Asia region (FRUS, Documents 61 and 83). As Dutt (2001,
p. 257) argues, “the Bank [ADB] not only helped to reduce American aid commitments […]
but also in the long run, by promoting economic growth and the concomitant stability that
would result from it, served […] to make these countries less vulnerable to communist
influence, thus fulfilling a major goal of United States Cold War foreign policy.” Being a
significant Cold War bridgehead, Hong Kong very likely was on the list that the American
Government would like to include in the ADB. Since 1951, the US State Department had
“declared that Hong Kong is important to both US and the UK” because “it is a symbol of
[the] strength and stability of the British Empire throughout Asia” (Clayton, 1997, p. 113).
Unsurprisingly then, in 1966, after the ADB founding members signed an agreement to
operate the Bank, Black took a tour of Asia to consult with member countries about their
interests in the ADB. In the mid-January of 1967, the ADB’s first President, Takashi
Watanabe, visited Hong Kong and introduced the ADB to the colonial government. He
invited Hong Kong to admit into the Bank, because “Hong Kong […] was ready with the
capital and the processing know-how that the Bank would need” (Hong Kong Standard,
January 13, 1967). In early 1967, Watanabe visited London and told the British Government
that it “should be prepared to make an application for membership on Hong Kong’s behalf”
(TNA, FCO24/240, September 22, 1967). The friendly attitude of the ADB was doubtlessly
beneficial to the admission of Hong Kong.
In spite of the Bank’s friendly attitude, any admission must be initiated by the applicant
or its metropolitan government. As aforementioned, Hong Kong was not particularly
interested in joining the ADB. This attitude was also observed by both the British
Government and the ADB (TNA, FCO24/240, September 22, 1967; Hong Kong Standard,
January 15, 1967). However, after “some consideration in recent months,” that was toward
the end of the 1967 riots, the Hong Kong Government changed its mind. As some
memoranda revealed, the FCO discovered that the Hong Kong Government became
“extremely interested in the possibility of joining the Asian Development Bank”
(TNA, FCO24/240, December 18, 1967) and decided to “join the Bank as quickly as
possible” (TNA, FCO24/240, October 9, 1967). In August 8, 1967, one day before he flew to
Manila to meet the executive members of the ADB, the Financial Secretary of the colonial
government, John Cowperthwaite, publicly admitted that Hong Kong would like to join the
ADB. In his word, Hong Kong could gain two advantages by joining the Bank. On the one
hand, it could allow members of the ADB to “buy here” to stimulate consumption and
economic growth. On the other hand, it “would [also] enhance Hong Kong’s status in Asia
and the world” (South China Morning Post, August 9, 1967). After the meeting, he stressed
that while Hong Kong was “not rich enough to be donors,” becoming a member of the ADB
would pave the way for borrowing money from the Bank “for certain forms of development”
(South China Morning Post, August 11, 1967).
The colonial government’s decision and changed attitude toward the ADB’s membership
must be considered in relation to the riots in the 1960s. On the one hand, as noted before, the
1967 riots exposed the vulnerability of the water supply system in Hong Kong. On the other
hand, more importantly, the two large-scale social unrests occurred in 1966 and 1967 had
made investors doubt if the colony was suitable for doing business (Mark, 2014). As Going out
Governor David Trench reported to George Thomson, Secretary of State for Commonwealth under the
Affairs, in late 1967: shadow of
[The] keys to the future [of Hong Kong after 1967 riots] lie in maintaining Hong Kong’s confidence Red China
in self; in maintaining the confidence of the world outside in us – for if our economy fails, all fails
with it – and in our ability to continue to do business; and, finally, in the attitudes towards us of a
China in convulsions. (TNA, FCO40/103, July 25, 1967) 179
Thus, maintaining confidence, especially business confidence, after the 1967 riots, became a
vital issue to Hong Kong’s future. As the British Government admitted that “refusal […] to
support Hong Kong in a course [to join the ADB] […] would inevitably be construed […] as
an indication that the British Government lacked confidence in the future of the Colony”
(TNA, FCO24/240, September 21, 1967).
In this specific sense, joining the ADB was neither merely a matter of economic
development, nor about strengthening links to the western world. It was, on the one hand, a
measure for the fiscal conservative colonial government to obtain extra financial resources from
the ADB to fund its expensive water supply project; therefore, the colonial government could
neutralize CCP’s leverage over the water supply without dramatically altering the economic
status quo, especially by increasing tax rate. Indeed, Hong Kong’s first loan secured from the
ABD was used to finance the construction of the Lok On Pai Desalting Plant, which was
the largest plant in the world in the 1970s and used to strengthen the water supply system of
the colony (Lee, 2014). The ADB provided a loan of USD21.5m (about HKD121.5m in 1978), and
that constituted one-fourth of the total cost of the Desalting Plant (Water Supplies Department,
1978, p. 3). On the other hand, it was also a move to restore Hong Kong’s business confidence
after the 1967 riots. In doing so, the colonial government could tackle the confidence issue by
enhancing the international status of Hong Kong, and simultaneously grasp the internal
security of the colony in the face of CCP’s geopolitical pressure. In this way, becoming a
member of the ADB was ultimately associated with the survival and the future of Hong Kong.
Allowing Hong Kong to join the Bank, as the British Government therefore concluded, would be
“political advantageous for Hong Kong” (TNA, FCO24/240, October 1967, without exact date).
After all, the admission process had to be initiated by the British Government. Although
senior officials from the FCO believed that the British Government should support
Hong Kong’s admission, they did foresee there would be oppositions from the Parliament
(TNA, FCO24/240, October 9, 1967). The issue was further complicated when different
stakeholders, such as the Treasury, were involved in this issue. During the lengthy
discussion, Cowperthwaite, who was supposed to wait for the British decision, actively
engaged different stakeholders and acted quite independently. He even submitted his
proposal to the ADB to resolve the legal issue related to the British role of financial
guarantor on Hong Kong’s loan (TNA, FCO24/240, January 29, 1968). His act exerted
pressure on the British Government as it gave a wrong impression of incompetence of the
British Government to the ADB (TNA, FCO24/240, March 19, 1968).
Although the British Government warned Cowperthwaite to “stay his hand” in the
membership issue as foreign relations of the colony was supposed to be handled by the
British Government (TNA, FCO24/240, March 19, 1968), he did not stop his maneuvering.
To secure Hong Kong’s admission, he made clear in a private letter to Watanabe that
Hong Kong was eager to join the ADB for borrowing (TNA, FCO24/240, February 2, 1968).
After attending an ADB meeting in April 1968, Cowperthwaite also told some correspondents
that the reading of the parliamentary bill on Hong Kong’s admission would be scheduled in
the coming summer. But at that point, the British Treasury was still indecisive toward Hong
Kong’s admission, and thus the bill was yet to be approved by the Cabinet (TNA, FCO24/240,
April 10, 1968).
AEDS The British Government was surprised by his announcement regarding Hong Kong’s
8,2 admission to the ADB because Cowperthwaite, as a colonial administrator who had no role
on the colony’s external relations, was supposed to be “precluded [from] saying anything
publicly about this [internal plan]” (TNA, FCO24/240, April 10, 1968). In response to the
complaint coming from the British Government, Cowperthwaite simply replied that “you
[the British government] can no doubt appreciate our acute embarrassment, which went
180 beyond anything I had anticipated, and the public damage done to this [British]
Government. I suppose that we can take some consolation in that the situation is at last in
the open and that there can be no going back now” (TNA, FCO24/240).
Although Hong Kong’s admission into the ADB might incur unwanted financial liability
for the British Government, when the colonial government exerted pressure to it by various
means, the British Government did not have much room to maneuver because not
supporting Hong Kong to gain membership in ADB would not only hinder the progress of
projects essential to Hong Kong’s internal security (e.g. the seawater desalination project)
but, more importantly, be regarded by the Hong Kong Government as “a breach of faith […]
damaging to world confidence in Hong Kong” (TNA, FCO24/240, March 28, 1968).
Consequently, despite the existence of conflicts among various stakeholders within the
British Government especially after Britain suffered a great deal in the sterling crisis in
1967, the British Government reluctantly accepted to sponsor Hong Kong’s membership of
the ADB. To avoid incurring unlimited financial liability, the British Government gained a
minor concession from the ADB that each loan offered by the ADB to the colonial
government would require a letter of guarantee issued by the metropole. To soften critics
who doubted that Hong Kong “would merely provide a second voice for Britain” in the ADB,
Cowperthwaite, during his first meeting with the ADB members, explicitly guaranteed that
Hong Kong, “as a full member in our own right,” “will speak and act independently and only
in what we see as the interests of the region, with which of course our own interests lie, as
we have always done in other regional bodies such as ECAFE where we are merely an
associate member” (TNA, FCO15/806, May 19, 1969). Thus, with the British Government’s
sponsorship, Hong Kong finally became a member of the ADB in 1969 and began to act
quite independently in the international arena.
Throughout the 1970s, Hong Kong obtained five ADB loans with a total amount of
USD101.5m (about HKD573.6m) to finance not just the seawater desalination project but
also other development projects including sewer system upgrades, public housing, new
towns and medical projects (HKSAR, 2008, pp. 2-3). These ADB loans, a senior colonial
official explained, could “reduce the Government deficit and to top up the Development Loan
Fund” (HKRS, 163/8/26, October 29, 1973), so that the colonial government could obtain
extra financial resources to fund the social defense and development projects, which aimed
to transform Hong Kong into a model city during the MacLehose administration (see, Yep
and Lui, 2010).
In 1969, Hong Kong, though still a dependent colonial territory of Britain, became a full
member of an international organization, acting on its own will regardless of the interests of
its sovereign power. Even before the signing of the Sino-British Joint Declaration in 1984 and
its participation in the General Agreement on Tariffs and Trade (GATT) in 1986, Hong Kong
had already stood side by side with other sovereign actors in the international arena.

Conclusion
This paper traces the process of how the Hong Kong and its colonial government engaged in
the Cold War and explained why the latter decided to join the ADB. This paper provides a
historical and geopolitical perspective that sheds light on the origin of Hong Kong’s
international status. The findings suggest that Cold War geopolitics at the local and
regional levels explain why Hong Kong became a member of an international organization,
the ADB, in the 1960s. On the one hand, Cold War geopolitics at the local level (i.e. Chinese Going out
Communist Government’s geopolitical pressure) incentivized the colonial authorities to seek under the
extra financial resources for its water supply project. On the other hand, the Cold War shadow of
geopolitics at the regional level (i.e. the US Cold War foreign policy) gave Hong Kong the
opportunity to accomplish this through becoming a member of the ADB. Indeed, at the onset Red China
of the Cold War, the broader geopolitical conflicts between the great powers brought the
colonial government various forms of external assistance, especially from the US 181
Government and its related agents, which mitigated the financial burden caused by massive
refugee influx from the mainland to the colony (see also Chou, 2010; Mark, 2007; Oyen, 2014;
Wong, 2002). Without the geopolitical-strategic value of Hong Kong, it seems unlikely the
US Government would pour resources into the colony.
It should be clear that one should not expect when the opportunity exists, Hong Kong
would then spontaneously become a member of the ADB. As shown in this study,
Hong Kong’s admission to ADB was indeed a very dynamic process. The colonial
administrators (i.e. John Cowperthwaite) had to maneuver between various stakeholders,
including Hong Kong’s sovereign power, Britain. This maneuvering, together with the
changed attitude of the colonial government after the 1967 riots, also indicates that it was
the colonial government’s own choice to acquire ADB’s membership and enter into the
international arena, even though this would mean Britain would have to reluctantly
undertake the financial liability resulting from Hong Kong’s admission to and borrowing
from the ADB. In this sense, structural factors, such as the Cold War geopolitical
configuration and external powers’ influences are insufficient to explain the international
status of Hong Kong (see, e.g. Chan, 1998). In short, it was the interplay of the Cold War
geopolitical structure and the agency of colonial administrators co-constituted the origin of
Hong Kong’s internationalization, regarding its international status.
Retrospectively, the 1967 riots were critical to Hong Kong’s internationalization.
As illustrated above, before the 1967 riots, the colonial government was not enthusiastic to
apply for ADB’s membership. The riots changed the attitude of the colonial government as
the riots exposed the geopolitical vulnerability of Hong Kong and undermined the business
confidence of the colony which the colonial government had eagerly maintained.
Responding to the 1967 riots, the colonial government decided to reclaim business
confidence and seek external financial resources for its social defense projects (i.e. building
up the self-sufficient water supply system) through admitting into the ADB, both of which
served the colonial government’s end in safeguarding its economic and political survival
vis-à-vis the communist China. In a word, this study identified the 1967 leftist riots to be
pivotal event that led Hong Kong to become a full member in international organizations,
the ADB – a critical juncture in the trajectory of Hong Kong’s internationalization.
Nonetheless, we should note that the ADB’s membership is only one of the many
international memberships that Hong Kong has possessed. It is worthwhile to trace the
story of Hong Kong’s internationalization by further studying Hong Kong’s participation in
different international organizations, for example, GATT (since 1986), to illustrate how this
critical juncture had led to the path that we observed. This question is particularly puzzling
when we consider the fact that the PRC Government has always been ambiguous about
Hong Kong’s international status: although Hong Kong and its international linkage allowed
the PRC Government to circumvent the global anti-communist containment strategy during
the Cold War (see, Peruzzi, 2016; Chan, 1998), Hong Kong’s participation in the international
affairs did also arouse the PRC Government’s suspicion. It continuously warned the British
to avoid turning Hong Kong into “a subversive base against China” (Loh, 2010, p. 175;
Weng, 1997, p. 59) or developing Hong Kong toward independence ( Jiang, 2017; Lane, 1990).
Therefore, it would be interesting to ask: why, and, perhaps more importantly, under
what conditions did the PRC Government accept Hong Kong’s continuous participation in
AEDS the international affairs since the late 1960s? What caused the eventual decision of the PRC
8,2 Government to maintain the external autonomy of Hong Kong after 1997, as stated in the
Sino-British Joint Declaration and the Basic Law, given that the PRC Government had
always been ambiguous about Hong Kong’s international participation? Answering these
questions is important because they not only shed light on the logic of internationalization
but also provide us a realistic understanding of how different players (i.e. the British, the
182 PRC Government, the colonial government) interacted with each other, despite their
imbalance of power in the international arena.
One might invoke a theory of path dependency to extend the findings of this study and
delineate Hong Kong’s trajectory of internationalization in the context of post-1967.
However, for reasons of being analytical rigorous, lack of sufficient archival records and
space for discussion, it is better to leave these questions to a follow-up study. Only in doing
so, we can conduct a thorough and contextualized discussion for these two questions as
mentioned above as well as do justice to historical events (e.g. the Sino-British Joint
Declaration in 1984) that shaped Hong Kong’s international profiles. Nonetheless, here we
suggest that confidence crisis of the Hong Kong people in the 1980s and economic interests
of the PRC Government might provide some crucial clues for these questions.
Politically, any move that might severely hamper Hong Kong’s well-being during the
transitional period and after 1997 would only cause a further outflow of professionals and
capital, deepen the confident crisis of the general public and ultimately undermine the
authority of the PRC Government as the incoming sovereign of Hong Kong. Economically,
Hong Kong was a vital source of foreign earnings and an international banking center for
China’s modernization (Goodstadt, 2007). In this sense, maintaining Hong Kong’s external
autonomy could be read as the PRC Government’s pragmatic ways to serve its own national
(economic) interests, provided that the British did not violate the PRC Government’s
“bottom lines,” such as the Chinese principle of political sovereignty. However, as we
demonstrated, without considering the role of the colonial government agency and its
strategic maneuvering, structural and external factors alone could not adequately address
Hong Kong’s process of internationalization. To be sure, in the future, further analysis
would benefit from the still releasing archival records, which would provide an insider
perspective by exposing Hong Kong’s strategic maneuvering and the way(s) to maintain its
unprecedented external autonomy under the suspicion of the PRC.
The Cold War, of course, ended when the Soviet Union suddenly collapsed in 1991, and
the global geopolitical configurations have changed tremendously in recent years.
The increasing influence of China in international affairs, the establishment of the Asian
Infrastructure Investment Bank and the implementation of the One Belt One Road Initiative
will inevitably have an impact on the international status of Hong Kong. For better or worse,
Hong Kong’s international status and its external relations will continue to be a subject that
deserves concern inside and outside academia.

Acknowledgments
The finding of this paper was presented at the Conference on the 20th Anniversary of
Hong Kong SAR in May 25, 2017, at The Education University of Hong Kong, organized by
Department of Social Sciences, Resource Center for Interdisciplinary and Liberal Studies of
The Education University of Hong Kong, and Hong Kong Political Science Association.
Both authors contributed equally, and would like to thank Seanon Wong Si-Lon,
Nelson Lee Ka-Kiu, Li Hak-Yin and Kenneth Chan Ka Lok for their advice and constructive
comments on this paper. The authors would also like to thank Melody Chuh Andrea,
Karen Wong Ka Wun and Pang Ming Hin for their generous support for doing this research.
The authors are also grateful to the two reviewers’ constructive comments on this paper.
All errors in this paper, of course, are the authors’ own.
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Britain and China 1945–1950: Documents on British Policy Overseas (DBPO), Series I, Vol. VIII,
Whitehall History Publishing and Frank Cass, London, Document No. 8, pp. 41-42.

Corresponding author
Chi Keung Charles Fung can be contacted at: charlesfung1990@gmail.com

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