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as a whole. On both counts it would be a long hard road and the best that could be hoped for was stage by stage progress. It was necessary to decide priorities in the interests of the ultimate objectives.
14. There were a number of problems arising from the UK's entry to which it was important that solutions should be found not only in Britain's interest but in the interest of those who traded with her. On many of these it would be necessary to get changes in the present arrangements within the E E C sometimes contrary to the national interests of some of the existing members and the British Government had to proceed carefully to get the necessary support from within the existing Community. All of this was calling for considerable adjustment in thinking among the general public and business community in Britain; it was not easy for them to appreciate some of the subtleties in it so that it was not surprising if it was not easily understandable to people so far away as Hong Kong.
15. Both Mr Denman and Mr Goldswith assured the Chamber, however, that there was no question of Britain using Hong Kong as a bargaining counter in dis- cussions within the EEC indeed, there was nothing that Britain had to offer from Hong Kong that could be used for this purpose even if they wished to do SO. It remained the British Government's sincere intention to look after Hong Kong's interests as best they could but it had to be recognised that there were real difficulties in the way of achieving all that Hong Kong might wish.
16. Mr Kite commented that he thought that there was an urgent and increasing need for a P R job to be done on this so as to explain to the Hong Kong public what was being attempted by Britain on Hong Kong's behalf, what had been achieved and why some objectives had not been achieved. The Chinese judged by results and if they did not see results and were not given clear explanations of the difficulties they would remain suspicious of Britain's intentions.
17.
In reply to a question from Mr Denman about the state of the economy in Hong Kong and the possibility of an adjustment in the pattern of industry and
of exports, Members of the Chamber of Commerce Committee said that although there was some clouds over the economy at present the long term prospect remained promising. They admitted however that this assessment might be con- ditioned by the traditional (and usually justified) optimism and resilience of the Hong Kong businessman. There was some move towards diversification of industry but textiles remained the biggest export earner and was, if anything, assuming larger proportions with a trend towards trading up into the top end of the market including more emphasis on garments than piece goods. Production costs generally were not yet increasing significantly despite the increasing cost of living; themain increase in costs was in the cost of raw materials which was causing concern. For many producers the uncertainty of raw material supplies was facing them with problems in financing their operations; they were finding it increasingly difficult to get materials on credit and, at the same time, difficult to get buyers until they could prove that they had material in stock with the result that some of themany small manufacturers were being faced with complicated cash flow problems which they did not have the experience to handle.
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18. A number of members of the Committee said that there was a change in the attitude of workers who now wanted higher wages and more free time and were less disposed to work as hard as they used to do. A shortage of labour was beginning to develop at least to the extent that workers could now shop around for jobs.
19. Because of the local economic situation and also because of the need to take advantage of quotas and preferences enjoyed by other countries Hong Kong Chinese manufacturers were investing substantially in factories, in textiles
and other /
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