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C
signs of improvement and the Hang Seng index (stock
exchange), although it has since fallen slightly
following an increase in interest rates, recently
reached a four-year high having risen nearly 1000
points in the past year.
Unemployment and inflation
figures remain low. The Hong Kong dollar, which is
pegged to the US dollar, has remained stable against
its US equivalent despite relatively large
fluctuations in the US dollar against other major
currencies. After three years of budget deficits Hong
Kong's Financial Secretary anticipates a return to
balanced budgets in 1986.
18.
In the short term domestic exports are expected
remain weak (although should the US
the US dollar weak en
domestic exports might regain s ome of the
to
price
Much
competitiveness lost over the past year or so). also depends on the demand in Hong Kong's major export
markets. Domestic export growth could be put at risk
by the growing clamour for trade protectionist
policies, particularly from the USA. Despite the
expansion of trading links with China in 1984 (when
Hong Kong's exports to China grew by 60% in real
terms), Hong Kong's economic dependence оп the US
economy as an export market remains very important.
Constitutional Development
19.
In
November 1984 the Hong Kong Government
published White Paper containing proposals for the
further development of representative Government in
the territory. Prior to publication the Government
had received a wide range of comments during two
months of public consultation. The White Paper was approved by the Legislative Council (LEGCO) in January
this year.
Its main proposal is for 24 of LegCo's 56
be elected at three-yearly intervals (the
32 will continue to be appointed by the
member s to
other
Governor).
CONFIDENTIAL