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CONFIDENTIAL
Reference MMF 393/1
งา
Mr Goodfellow
Hong Kong & Indian Ocean Department
UK AID FOR HONG KONG
64
NKK 5/2014y
1987
I refer to your minute to Mr Kerr dated 20 September and to our discussion this morning. There may be some ODA opposition to these aid propo- sals on the grounds that Hong Kong is rich enough to finance its own development.
2. Of course the question of UK aid for Hong Kong is far more complex than this. But some comment on Hong Kong's 'riches' máy still be needed. Although income statistics give Hong Kong a high ranking among developing countries, some allowance should be made for Hong Kong's serious environmental difficulties of urban congestion and pollution and the continuing burden of absorbing refugees from mainland China. for income, there is some reason to question the higher estimates published by the World Bank*. use (duly qualified) could be made here of the latest Hong Kong estimates which show a 1970 per capita GDP of US $700. In this connection please refer to my minute to Mr Lambert of today's date.
3.
As
Some
As you have mentioned, the Secretary of State has recognised "the political need for outward and visible signs of a special and beneficial relationship with Hong Kong" I would prefer to describe this as a politico-economic need, simply because Hong Kong's development depends heavily on the current state of business confidence. As the 1967 riots showed, busi- ness confidence in Hong Kong's future is easily shaken, and the latest GDP estimates from Hong Kong do reveal a sharp prolonged fall in Hong Kong's rate of economic growth during 1967/68. Hong Kong remains particularly vulnerable to changes in the state of business confidence and must contend with the uncer- tainties not only of the UK's entry into the EEC but of the increasing age of Chairman Mao and the approach of the 1991 deadline for renewing the lease of the new territories.
4.
In these circumstances there is a strong case for a conspicuous aid gesture from the country directly responsible for Hong Kong. The readiness of HMG to invest substantial sums in long term pro- jects in Hong Kong should give a definite boost to foreign and local business confidence in Hong Kong. Apart from the benefits flowing directly from the pro- jects themselves, there could be significant gains from the generally improved business climate.
* The latest World Bank Atlas gives Hong Kong
a 1969 per capita GNP of US $850.
CONFIDENTIAL
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