GPS 250
PRIORITY
CONFIDENTIAL
CYPHER CAT A
HKK 12
7616/
R.
Y NO./51
36
FM FCO 281751Z
RY
Taken
INDET
CONFIDENTIAL
TO PRIORITY HONG KONG TELNO 744 OF 28 SEPTEMBER,
FROM STEWART FOR DORWARD, ACTING DIRECTOR OF CUSTOMS,
TRADE AND INDUSTRIES
HONG KONG AND THE MFA
LEFT
201
1. I PROMISED TO LET YOU HAVE OUR FURTHER THOUGHTS ON THE
QUESTION, RAISED IN THE GOVERNOR'S MEETING WITH FCO MINISTERS ON 26 SEPTEMBER, OF THE LIKELY EFFECT ON HONG KONG'S PROJECTED
GDP GROWTH RATE IF THE COMMISSION'S PROPOSALS WERE ACCEPTED.
2. THE GOVERNOR'S CLAIM THAT THE GROWTH IN GDP WOULD BE REDUCED
BY 1 1/2 PERCENTAGE POINTS AS A RESULT OF THE COMMISSION'S
PROPOSALS WAS DERIVED FROM THE ESTIMATE THAT THOSE PROPOSALS WOULD
PRODUCE A 1 1/2 PERCENT DROP IN DOMESTIC EXPORTS, AND FROM THE
CLAIMS THAT DOMESTIC EXPORTS FROM HONG KONG ARE ROUGHLY EQUAL TO GROSS DOMESTIC PRODUCT (PARAGRAPH 5.1 OF THE HONG KONG GOVERN- MENT'S MEMORANDUM OF 2 SEPTEMBER) BUT IN FACT DOMESTIC EXPORTS
IN 1976, AT HK DOLLARS 32,629M, WERE ONLY 69.3 PERCENT OF GDP.
OVER THE TEN YEARS 1967-76, DOMESTIC EXPORTS WERE EQUIVALENT TO
63.8 PERCENT OF GDP. THIS LATTER FIGURE APPLIED TO THE EXPORT
FIGURES GIVEN IN THE MEMORANDUM WOULD GIVE A DROP IN GDP IN
1978 OF 0.96 PERCENTAGE POINTS. THIS IS ADMITTEDLY SOMEWHAT HIGHER
THAN THE FIGURE OF 0.8 PERCENT WHICH WAS QUOTED. AT THE MEETING (AND WHICH WAS BASED PARTLY ON A MISCALCULATION). BUT IT IS
STILL WELL BELOW THE FIGURE OF 1.5 PERCENT CLAIMED BY THE
GOVERNOR,
OWEN
FILES:
HKGD
ETD
ECON D
PS/MR JUDD
FS/LORD GORONWY ROBERTS
MR CORTAZZI
COFIES TO:
HONG KONG GOVT OFFICE
CONFIDENTIAL