17. Since the early 1950s, the economic transformation
of the Colony has been described in rather extreme terms, as an "economic miracle", and it is assumed that industrialization has been the panacea for all Hong Kong's problems. The economy of Hong Kong today is the product of, largely circumstantial, skill and good fortune, and is not necessarily based upon a firm economic foundation. To survive Hong Kong has to export, yet her visible trade always shows an imbalance in favour of imports which include virtually all her food and raw material requirements.
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8.
While Hong Kong was producing a number of shoddy manufactures she was a threat to no one, but the measure of her post-war success is the threat she is now seen to pose to medium and high-qualify producers. The result has been increasing pressure for restrictions against Hong Kong's export trade. Already this year the Swedes Norwegians and Canadians have negotiated for further
voluntary" restraints with Hong Kong, and agreements exist already with other countries, including the U.S.A. Developing countries, on the other hand, must concen- trate on developing their indigenous industries, and have
} therefore, to resist the encroachment of Hong Kong's trade. Trade restrictions could cause the boom in Hong Kong to subside with consequent political, financial and economic difficulties.
19. Even if, in present circumstances, the argument of Hong Kong's relative wealth is to prevail against the grant of capital aid we would have hoped that her entitlement to technical assistance would not be questioned. We were therefore dismayed to be told last April that ODM's technical assistance to Hong Kong was "confined to a tapering programme of mapping work by the Directorate of Overseas Surveys and some training at a cost of £30,000 a year -" which it was hoped "eventually to reduce if not to eliminate in view of Hong Kong's relative affluence". You rightly say in your circular that participation in an overseas country's developing programme should normally extend over a period of years. This is obviously the case with technical assistance and to run down the programme because Hong Kong is well off at the moment is apparently a short-sighted policy.
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10. I was glad to see from your immediate minute of 8 August that this Office is to be consulted about ODM's proposals for mopping up the substantial sum underspent out of the current aid ceiling. It would be interesting to know of the basis on which these supplementary allo- cations are being made: probably on the basis that the countries concerned are in a position to spend money rapidly. It may be too late to adapt the Kai Tak
in fact on account of ODM's doctrinal opposition it probably is: but if we get ministerial support for some aid to the Colony it
"But on the bases requests to this new situation: of para 4 9 (23)
Kai Tak would not will 'be useful to know that there is a sum of money be a starter for the available to meet the cost.
underpent-balance.
mair
(H. H. Stewart) Hong Kong Department
12 August, 1969