CONFIDENTIAL
Hong Kong's economy. Our present estimate is that while some hardship will be caused, the eventual result of diversifying could be beneficial to the Hong Kong economy, although this is likely to take a very long time. The reduction in textiles exports will not justify a slowing of social progress; indeed it may require a speeding up. The Hong Kong Government seem ready to contemplate increased public expenditure if there is a
recession.
C.
Trade implications
a.
5.
Hong Kong will
This may,
We may lose the important power station contract. probably blame this on our attitude over textiles. however, well not be the real factor; price and other aspects of competitiveness could be problems. The loss of the contract will be a blow to the power generating industry and to British trade with Hong Kong, already seriously in imbalance.
Invisibles
A new study is being made of the extent to which invisibles may help to balance out the visible trade imbalance.
Full briefs will
The Minister of State's talk with the Governor be submitted. We presume that Lord Goronwy-Roberts will wish to touch on all of the four main aspects, but we suggest he might wish to concentrate on getting: -
a.
Ό
c.
a.
Quicker progress on a comprehensive social security scheme Better coordination between social policies (in wide terms) and
revenue.
An improvement in the police structure.
The Hong Kong Government to recognise that it is very much in Hong Kong's own interest to ensure that the imbalance in British trade with Hong Kong is rectified at least to some extent.
6. The Minister of State may also wish to re-open the question of secondments to Hong Kong (in particular of a Grade 4 officer from the United Kingdom. The Governor tried and failed to create a slot in the Government machine and Lord Goronwy-Roberts agreed to shelve the idea.
/Recent
CONFIDENTIAL