CONFIDENTIAL
SUMMARY
Substantial, and at times spectacular, progress has been made during the last year in economic and social fields, despite continuing Communist pressure.
2.
There were budget surpluses of £8 million in 1967/8 and £10 million in 1968/9. Capital reserves have yet to recover from the devaluation of the pound, but the current position is substantially better than could reasonably have been expected.
3.
Despite quota restrictions and trade restraints, domestic exports increased in value by 16.9% in 1967 and by 25.8% in 1968.
4.
Industrial development is expanding, but there is a shortage of industrial accommodation and a severe shortage of labour in some industries. Tourism is expanding, with the number of visitors in 1968 rising by 17%.
5.
Very large sums are being spent on a wide range of public works.
6.
Over one-third of the population is now accommodated in subsidised housing, but there are still nearly 500,000 squatters.
7.
Good progress is being made in primary education. Fees have been reduced to a very low level. Additional emphasis is being placed on technical education at the secondary level.
8.
A new scheme whereby City District Officers are appointed in the urban areas is progressing satisfactorily.
9.
The administration of resettlement estates, the large numbers of hawkers and the prevalence of illegal mini-buses present substantial problems.
10.
The violent phase of Communist confrontation ended in December, 1967, and has been followed by a non- violent phase in which the Communists are trying to gain popular support and to exploit weaknesses and deficiencies. in the administration, in pursuance of their consistent aim of dominating the Hong Kong Government. They have had some difficulty in persuading their hard-core supporters and the "strikers" to accept the softer line.
11.
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13.
There has been some expansion of Communist schools. The border has been relatively quiet.
All detainees have been released, but about 250 "confrontation prisoners" are still in prison.
14.
Although Hong Kong remains vulnerable to external pressures, to trade restraints and to disturbances experienced by other currencies, the future looks reasonably bright and the confidence of the community is well maintained.
CONFIDENTIAL