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but this problem of description is real and emotive for Hong Kong. I should hope that means of quietly

resolving it without additional UK legislation might now be found.

Kacd/Hong Kong Domestic

2,11. With revenue buoyant on both current and capital

account, the Hong Kong Government was able to increase estimates of expenditure for the financial year 1981/82 by 12.8% in real terms over the previous year, and still achieve a very large and theoretically disinflationary surplus. It was thus able to press on with its published programmes of expansion of works, housing and public and social services. I will not rehearse the details, which were generally satisfactory, but a new Hong Kong is steadily being built. It is not only a construction of factories and houses, but rather a series of complete communities with their community services, games halls, swimming pools, town halls, country and urban parks, and their remarkable flowering of organised cultural and recreational activities.

2 12.

A few points are worth a special mention: -

a) The new measures introduced in October 1980 appear to have drastically reduced illegal immigration. But we no longer know how many have got in and somehow live submerged and outside the law. The police believe that while there are such people the number is small. This will need very careful watching.

(b) The percentage of crimes of violence committed 2 by immigrants who were originally illegal is high. An

abnormally large number of fires in squatter settlements (25,000 made homeless) is also probably attributable to "the high proportion of recently arrived unattached. young males in the areas affected. It is obviously going to take several years to absorb this unruly and under- educated element.

(c) A review of housing in the light of the 1981 census (after the influx of illegal immigrants) showed a shortfall of self-contained units of 260,000. On various assumptions as to increase of population and other factors we reckon that by 1985/86 the shortfall should be about 90,000, and the problem have become manageable in the second half of the decade. Over a

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