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the issue. But this is not likely to happen at all quickly.
7. Apart from the business angle, there is increased interest in the question of Hong Kong's future. I found this particularly among the young, educated people whom I met. With them the concern is one of identity. "What kind of a person will I be by the turn of the century? Will my children grow up at British Hong Kongers or as Chinese?"
The
8. In general Hong Kong/China relations continue to be good. Chinese themselves are obviously cultivating this angle (Huang Hua's overnight visit, invitation to Sir P Haddon-Cave). Even over potentially serious incidents (the collision in Deep Bay) they are ready to take a conciliatory line. But we need to remember that Hong Kong is only one of China's problems and by no means the most important. Peking will we see it in the overall context of the four modernisations at home and of the Taiwan problem and relations with the Soviet Union and the West overseas.
The Economy
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9. Domestic confidence is very high. The budget was mainly as official endorsement of that confidence, although the Financial Secretary's hints of the possible need for closer overnment involve- ment, eg over interest rates, have aroused specul tion, as has a feeling in some quarters that there may be a move in coming years away from the strict alignment of expenditure with the current account surplus. The high budget surplus is seen by some as an insurance against recession later in the year, though others point to its reliance to a great extent of continuing high land prices.
10.. In the private sector attitudes to the world economic situation vary. At the moment order books are full. Prudent.observers note that orders are now placed on a shorter term than before, so may not. be an accurate barometer of the prospects 6r 9 months hence. Most people do expect difficulties from a downturn in the US and Europe towards the end of the year, but they feelore confidence about meeting them then they did in 1974, when stocks were higher.
11. Most observers appear to see the rep rt of the Advisory Committee on Diversification as confirming the existing trend of industrial development, e increasing sophistication and sub-division within the main exising categories of industry textiles; electronicsę plastics/toys. There will not be much stope for entirely new lines. Oil exploration should offer some opportunities but should not be over-rated. (Mr March, the Senior British Trade Commissioner, is very alive t the possibilities and limi ations here).
12. Land and rent are current topics of debate. The allegations that the Government has held back land in order to keep up the price should be seen in context. Hong Kong i bound to be a land-shortage territory anyway; this is currently underlined by very high demand and by pressure on the construction industry. Nevertheless there is
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