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Importation of Labour
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The Governor said that Hong Kong also was suffering from inflation, a problem caused by an over-successful economy. He hoped inflation would level off by the end of this year. Another problem was the current labour shortage. Hence HKG's recent decision to introduce greater flexibility in admitting skilled labour from all sources, including China. We needed to work out the practical procedures for implementing this decision, but he hoped PA would be able to discuss these with NCNA very soon. must try to get across the message that this did not mean any relaxation in our controls on illegal entry from Guangdong. We were aware of the problem Guangdong faced of people coming from other provinces to look for work, and were concerned that in seeking to cure one illness (Hong Kong's labour shortage) we should not cause a worse one. Mr. Xu agreed that we must be careful in our handling of the labour importation problem, and should try to deal with it in a manner consistent with Hong Kong's continuing development as a high technology/service industry centre. The Governor said we must also take care in our handling of the reaction from Hong Kong labour itself: it was appropriate that Hong Kong workers should benefit when the economy was doing well.
5.
The Governor said that although the economy was doing well and Hong Kong was progressing, people remained nervous about China and about the future. What did people say to Xu about the future? Mr. Xu said that many in their comments failed to take account of the JD's provisions on the existence after 1997 of two different social systems. Half of Hong Kong people were immigrants from the mainland: many had come just after 1949; and were afraid of communism because of its confiscations of property at that time. They were not sure this would not happen again, and this was a demoralising factor. The CCP now had completely different views: immigrants doubted this, and did not believe Chinese statements. This would be solved by the process of developing the new Chinese policies. But when difficulties occurred, people became nervous.
Also Hong Kong living standards were now quite high, and people were sensitive to this fact. As he had seen in his North American trip last year, Canadian and Australian social welfare standards attracted Hong Kong emigrants. Half of Canadian Government revenue was used for welfare purposes, taking care of its people from birth to death. This was a factor in the emigration problem, particularly for the
middle class. 1997.
But we should also not exclude the effect of
CONFIDENTIAL