CODE 18-77
- 2
Reference
(GDP 1976 = HK$47,114 millions; exports
HK$32,629 millions)./ This means that the GDP growth would be reduced by 0.77 points only.
Memorandum of renegotiation
Para 4.4:
9. This paragraph talks of the difficulties of moving labour into other manufacturing industries yet also speaks of the increased demand for labour in the building and construction industries and in the consumer services sector which cushions some of the employment effects of declining textile exports.
Para 5.1:
10. Error already referred to above.
Para 5.3:
11. It does not follow, as the paper says, that there is likely to be a fall-off in private demand for building and construction activity. Present indications are that the private demand for building and construction activity is restricted by government demand for labour and resources in this field so that if government demand should fall off then private demand could move into the vacuum.
Para 6.2:
12. It is true that textile and clothing dominate Hong Kong's export industry on being more than 50% of the total but this is partly due to the Chinese industrialists' habit of following his leader, ie if a successful avenue is opened up then everybody wishes to get into it. This happened with Hong Kong's flourishing wig industry which is now as dead as a dodo but the workers have been absorbed into other industries. It is Hong Kong's own interest to diversify and the EEC proposed action could have a salutary effect on the economy by forcing industrialists to invest in other fields.
Para 6.3:
13. I wonder to what extent the Hong Kong Trade Development Council has explored the possibility of exporting to the Arab states. As their products become increasingly sophisticated they should be able to sell to the higher end of the rag trade in countries such as Brazil. I am sure that these avenues are being explored but no mention is made of them.
Para 6.4:
14.
Courlouripdo in curule,
The growth in GDP need not affect the amount spent on social programmes.
If one considers GDP as a cake then HKG is only taking a very small slice of it. Should the cake be reduced in size then there is nothing to stop the Government from taking a larger slice.
15.
These are only preliminary thoughts but I think they are sufficient to indicate that, as usual, the Hong Kong Government is overstating its case. It has too much faith in propaganda and unfortunately believes its own propaganda and is therefore
likely to fall victim to it. J
8 September 1977
SS 10/76
T Duffy
Hong Kong & General Dent