CONFIDENTIAL,
Only Kai Tak
ii) Economic value of Hong Kong to Britain the criteria on
which to base an assessment of the economic value of Hong Kong to Britain are still being discussed with Hong Kong. When
these criteria are established we can begin to quantify the value. Economists Department do not intend to raise this. If Mr Cortazzi repeats his suggestion of writing to Mr Steele at the DOT I would recommend that you try to dissuade him. Such a move will antagonize (even further) Mr George Rogers.
iii) British exports to Hong Kong the participation of Mr March (Senior British Trade Commissioner) in a series of seminars organised by the British Overseas Trade Board was most successful and it has been agreed that the Senior Trade Commiss- ioner should be able to return to the UK every year to repeat
these useful exercises.
A letter of intent for the transmission system from the new power station was announced on 13 December. The order is worth
almost £100m. No decision has yet been reached on KCR or MTR.
iv) Royal Hong Kong Police Force a new Commissioner of Police and Head of Special Branch have been appointed.
Good progress
amat
is being made in implementing the Crane Report. The review of the Special Branch was carried out recently by Mr Harrison, who will be submitting his report to the Governor.
3. DEVELOPMENTS IN THE HONG KONG ECONOMY
(Submission and Governor's letter circulated)
3.1
Mr Michael Stewart expressed the view in his report that the Hong Kong Government might have to take a more active approach to economic planning. The Governor's letter of 20 November warns of the economic problems which are starting to emerge:
a) excessive growth in the money supply;
b) erosion of the value of the HK$ ;
c) a tendency for domestic demand to draw resources from the export
sector.
CONFIDENTIAL
/3.2