}
8.
But
one
area where some relief might be given to
inflationary pressures would be to ease the restrictions on inflow
of labour. This was a regular refrain from all business
interlocutors.
I sensed that the HKG may have been a bit too cautious in the face of, for example, trade union pressures. But adjustments here, other than on a massive scale, would have only a marginal effect on the general inflationary position.
9.
Overall
I
discussions with HKG representatives left me feeling a little uneasy about their approach to the inflationary problem. There was even some suggestion that inflation at around current levels was necessary to sustain the growth process. took the opportunity with both the Financial Secretary and the Secretary for Monetary Affairs to urge that, even though recent figures showed some slight improvement, they should keep a very close watch on inflationary developments and do what they could, consistent with the exchange rate link, to restrain them.
Growth prospects
10. One or two question marks over future growth prospects emerged during my discussions. One, already noted above, was the
competitiveness threat in the services sector. Whereas it was
relatively easy to source manufacturing products from lower cost
areas, there were clear limits to the extent that could be done
Others wondered whether HK businesses were now as
for services.
adaptable and entrepreneurial as they nad been a decade ago;
corporations with their business school trained managers and consultants moved far less quickly than one man bands.
11. But the overriding impression I gained was of the continuing vitality and responsiveness of HK. The big factor sustaining the growth process is the China link. Although aware of this in general terms before my visit I was struck by just how potent a factor it is. Everyone had their favourite statistic to prove the point eg 3 million people (equal to the size of the HK labour force) employed in China by HK businesses; China was now a larger market for HK than the United States; 40% annual growth of
3