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CONFIDENTIAL

Bette

11.

Let me say that these developments are not related in any

way to the status or future of Hong Kong. On the contrary you

have every reason to be thankful for the ending of an injustice

and an anomaly which was a major source of friction and

misunderstanding in the world, and in particular in this area.

12.

I would like to say how glad I am that Sino-British

relations have steadily improved in recent years, and that they

are now once more on a correct and satisfactory footing.

Both countries have much to offer each other in trade and

Good relations between us must be to its lenefit of all

culture. [ I am sure that you will all join with me in wishing

Mr Addis, our new Chargé d'Affaires, every success in his

mission.

13. And now a word about trade. It was a great relief to

me that it was possible to achieve so quickly the realignment

of parities of the major international currencies.

With every

week that the confusion of exchange rates continued, the blight

of protectionism seemed to threaten more closely the continued

expansion of world trade. It has been on this expansion that

Hong Kong's success has been built, as well as on the skill

and enterprise of its people. But now the American surcharge

is removed and the future is brighter.

14.

Hong Kong, of course, still has to face a degree of

protectionism in its major markets for some of its products.

You are practical and realistic people and you know that this

is the price of your own phenomenal success, and that particularly

*

in the case of some textiles there must be a limit in some

markets to what is politically tolerable. But even where

/Hong Kong

4.

CONFIDENTIAL

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