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the clothing industry "perhaps reflecting cash "low difficulties as a result of the slowdown in exports of clothing" ** As a result of the recent EEC quotas I doubt that the bunks will continue to regard the slowdown as a temporary shortage of cash and may cut back on loans to the clothing industry rather than extending them, so reducing credit and growth in the money supply.
10. Domestic Output. You will be able to obtain much better information on this than I can. Suffice to say that textile production dropped 14% in the first quarter this year and is now back at the pre-lepression - and boom level of 1973, and that the construction industry is booming at the moment but is worried as it has committed itself to oversupplying private office developments in 1978 (so final sale prices and hence profits will be low) and it has not got orders for other types of work coming in. The fall in business confidence in the construction industry over what it expects to happen in the coming quarter was quite marked in the 2nd quarterly business survey of 1977. There is no hard statistical information available on any other sector's output. However, at last the Government has done something about this: it is now conducting Hong Kong's second Census of Industrial Production prior to producing a quarterly production survey. I enthusiastically welcome this development - at last we will get hard information on domestic industry's underlying gross and net output rather than just seeing the surface of what is exported and imported. I would be grateful for any advance news you can obtain on exactly what information the production survey will produce (since if they miss some vitul series of statistics out we can argue for its inclusion far more easily before the first questionnaires go out than we could once the survey has been established for 6 months). Also, whilst riding the hobbyhorse of better information, may we enquire what progress has been made on estimating Invisible exports and imports and flows of capital. The World Bank, in their report",
said " ... without great expense of time or effort, the Hong Kong Government could reasonably accurately estimate the territory's balance of payments". In Annex B they then proceeded to demonstrate how to set about estimating flows of capital and services, deliberately drawing up a balance of payments sheet with sketchy figures in it so as to prod the Government into producing better figures Consequently, figures are presented here purely for illustrative purposes as the Hong Kong Government could, if it desired, improve them substantially."
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11.
* Annex B para. 3 Vol. II of their pecial Economic Report.
** Quote from half-yearly economic report
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