details of the social programme to which the Governor refern. The totals involved are impressive. The Governor accepts that if this programme requires a somewhat less conservativa: budgetary policy over the next ten years, then this, within reason, will have to be accepted. Thereafter the approaching end to the New Territories lease will put an increasing emphasis on confidence and stability.
The second despatch describes the new phenomenon, l'or Hong Kong, of real wages falling 11% in one year.
Thin Rhon to the root of why the Chinese population of the Colony dhongto to live there, and to acquiesce in an alien administration. The Hong Kong Government's remedy is the traditional one of growth. This has worked before, and is really what Hong Kon is all about, The safety-net approach of minimum wages lear less appeal, and the possibility of keeping wages up by strengthening the trade unions, which was a subject of the Labour Adviser's recent report, does not get a mention. 5. These two despatches, with the third one, when receivei will provide a solid foundation for Lord Goronwy-Roberts 61 with the Governor on 18 June. The Minister may also wicht consider whether the Secretory of State should see the depr ches, before receiving the Governor. Although they are somewhat specialised, the political and administrative probi me of our largest remaining dependency are of general interent and I have sent the despatches for printing.
1
ACSL
A C Stuart
Hong Kong and Indian Ocean Dept.
5 June 1974
PS/PUS
Sir D Watson o.r.
Mr Wilford
Mr Youde
Mr Foggon (Overseas Labour Adviser) Mr. Evans (Far Eastern Dept.)
SIRET
}