CONFIDENTIAL
10. ACCEPT THAT IN THE LONG RUN HONG KONG MUST DIVERSIFY BOTH
PRODUCTS AND MARKETS, THE CHANGES IN INDUSTRIAL LAND POLICY IN
CENT YEARS HAVE BEEN DESIGNED TO ASSIST THIS PROCESS, THERE HAS ALREADY BEEN A VERY RAPID GROWTH IN OTHER INDUSTRIES BUT THIS
HAS SO FAR BEEN MATCHED BY THE GROWTH IN TEXTILES DUE TO THE TRADING
UP PROCESS I HAVE JUST MENTIONED.
11. THE FULFILMENT OF OUR SOCIAL PROGRAMMES IS DEPENDENT ON OUR CONTINUED ECONOMIC GROWTH, MY CONCERN IS THAT ANY FURTHER REDUCTION IN GROWTH POTENTIAL IMPOSED ON OUR TEXTILE AND CLOTHING INDUSTRY, THE MAJORITY OF WHOSE EXPORTS ARE ALREADY SUBJECT TO QUANTITATIVE LIMITS, COULD PUT THESE PROGRAMMES AT RISK. THIS WOULD BE NOT ONLY FOR BUDGETARY REASONS WHICH MIGHT OR MIGHT NOT BE CONCLUSIVE IN
THEMSELVES, BUT MORE PROBABLY FOR PSYCHOLOGICAL ONES -- DISILLUSIONMENT, SENSE OF INSECURITY AND GENERAL LACK OF CONFIDENCE. THE LATTER COULD ADD UP TO FAILURE OF CONFIDENCE IN THE HONG KONG
GOVERNMENT OR ITS POLICIES,
12. CAREY, WHEN HE WAS HERE LAST WEEK, MADE RE-ASSURING STATEMENTS
TO THE MEDIA, BUT IN PRIVATE HE SAID THAT YOUR WOULD BE SEEKING * 'MORE ADEQUATE PROTECTION, AGAINST CUMULATIVE MARKET DISRUPTION PARTICULARLY IN PERIODS OF RECESSION**, WHILE HE WOULD HOPE THAT CUT BACKS COULD BE AVOIDED, THERE IS NOT MUCH SCOPE WITH A GROWTH
RATE IN THE UK MARKET OF ONE HALF OF ONE PERCENT FOR MORE ADEQUATE PROTECTION? THAT WOULD NOT INVOLVED ACTUAL CUTBACK.
3 3
13. ! HOPE YOU CAN GIVE ME, THEREFORE, A GENERAL ASSURANCE THAT HMG WILL PROTECT HONG KONG'S INTERESTS AND, WHERE THEY CONFLICT WITH THE UK'S INTERESTS, SZEK TO COMPROMISE: AND
SPECIFICALLY THAT THERE WILL BE NO FURTHER REDUCTION ON GROWTH POTENTIAL. IF AND WHEN PRESSED WE COULD THEN DISSCHATE, PRIVATELY AT LEAST, THESE ASSURANCES AS A FOLLOW UP TO CAREY'S REMARKS.
14. AS YOU KNOW, JORDON WILL BE IN LONDON NEXT WEEK FOR ONE OF HIS
REGULAR ROUND-UP MEETINGS WITH ALL DEPARTMENTS CONCERNED. HE WOULD BE AVAILABLE FOR ANY PRIVATE DISCUSSIONS YOU THINK DESIRABLE,
NACLEHOSE
DEPTL DISTN
HKD (3)
E 12 PRES SEC
TARD E CON D
COPIES TO
HONG KONG GOVERNMENT OFFICE
6. GRAFTON STREET
CONHDENTIAL