CONFIDENTIAL
THE GENERAL ECONOMIC AND SOCIAL SITUATION
1.
The
For many years, Hong Kong has enjoyed boom conditions.
Until the past year there was a steady rise in real wages,
averaging about 5.2% per annum with a relatively stable cost of
living. This situation is now being undermined by inflation.
Chinese have been increasing the prices of the food they export.
In 1973 the consumer price index increased by 21%, but wages in
manufacturing industries increased by only 11.3%. In the six month
period up to September 1973 real wages actually fell by %. These
trends have led to criticism of the increasingly uneven distribution
of Hong Kong's wealth. At present there is no effective mechanism
in Hong Kong whereby such a situation can be rectified. Only some
10% of industrial workers are members of Trade Unions. The Unions
themselves are polarised between those which support Peking and
those which favour Taiwan. Collective bargaining only exists in
very limited areas of employment. The Hong Kong Government tend to
follow a policy of non-intervention.
2.
The implications of this situation for the social structure
of Hong Kong could be serious. By and large the four million
Chinese inhabitants live there because they believe it is in their
interest to do so. Perhaps half of them, or their families, were
refugees from China. They have no great loyalty to the British Crown
as such. Nor are there representative institutions (other than the
Urban Council which has some representative element) through which
the popular will can be expressed. Business and moneyed interests
are well represented in the Legislative and Executive Councils, who
are the Governor's principal unofficial advisers. The Governor's
problem is to involve the interests and energies of the ordinary
people.
CONFIDENTIAL