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Mr Wilford
Les
23/7
1. This is a valuable and thoughtful minute. My comments are necessarily diffident, lacking personal knowledge of the. position in the territory on the ground and the dramatis personae other than the Governor.
2. I find it difficult to assess the financial situation, on the evidence given, in the black terms that Mr Haddon-Cave- uses. No doubt a major factor in the political viability of Hong Kong is maintenance of confidence in its high-geared economy; nevertheless, for a four million strong population, the reserves are not bad and the notion that the note issue should be covered as to 100% by the Exchange Fund sounds Victorian by any standards.
3. The immigration issue- both from China and elsewhere is going to be a perennial problem. The difficulties of handling it will vary, no doubt, according to the pressures of public opinion in this country which command a hearing with Her Majesty's Government. But essentially, I believe, the views
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of the Hong Kong Administration should prevail, provided that they do not conflict with international agreements to which we are a party or obligations we have entered into. 4.
It is clear that Sir M MacLehose, for a variety of reasons, finds himself somewhat isolated in his community.
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a large extent this would seem to be due to the forward policies that he is backing which will take some time to gain acceptance in the bureaucracy and hierarchy. This I think makes it the more important that (since these policies are welcome in Whitehall) the Governor should continue to have the fullest backing we can give him.
5. I do not know the personality involved but, on Mr Stuart's evidence, the time is ripe for Mr Haddon-Cave to be moved on, away and up.
23 July 1974
Copies to: Mr Wilford
Mr Stuart
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