Etudes
CONFIDENTIAL
labour and the presence of entrepreneurial and financial expertise (paragraph 4 and 6). The government tends to the view that any tampering' with its basically non-interventionist approach to the management of the economy would impair further growth prospects; given that the economy is without doubt highly dependent on external trade and virtually unable, therefore, effectively to regulate the level of internal demand (party;raph 2-3).
3. But whilst it is probably the case that its own brand of free enterprise on the one hand and the lack of constraints on the supply of labour and specialist skills on the other has not inhibited the growth of the economy, it should not be overlooked that Hong Kong's prosperity has, as its high degree of external orientation implies, really been founded on the rapid growth of post-war demand in its major export markets in North America and Western Europe (paragraph 8). It can by no means be concluded, therefore, that increased government spending, for example, and higher taxation, possibly with resort also to ton finance, would, of necessity, undermine the private sector's ability to continue operating successfully.
4.
This applies with at least as much force today, even though the economy has lost much of its former buoyancy in the wake of the world recession induced, in large measure, by the increased price of oil (paragraphs 25-27). Indeed, the argument may even have been strengthened: the labour market in Hong Kong is now relatively slack and is likely to remain so for some years to come since (a) the population of working age is still rising rapidly and (b) the rate of growth of world demand is not likely tobe us high in the future as in the past (paragraph 36). It in highly probable, therefore, that increased public spending, on any scale that would conceivably be contemplated, would
/effectively
CONFIDENTIAL