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a trader and that improvements which increase costs to a point at which trade is lost and unemployment rises are self-defeating. Clearly if criticism of labour conditions in Hong Kong is be met a coherent programme of legislation to bring conditions up to the comparable best in Asia is necessary. programme is suggested in Annex D.

Such a

Institutions

13.

Further social progress in Hong Kong will depend on public support for the necessary legislation and for higher

taxation if required to implement it. The normal method for

mobilising this through democratic representative institutions

is precluded in the case of Hong Kong. China's opposition to

the development of such institutions, which could affect their

claim to sovereignty and lead to growth of KMT influence in the Colony is well understood by the local population.

14.

Other more limited solutions to the problem of

introducing elective institutions have been suggested:

(a) the election of only a few unofficial members of the

Legislative Council;

(b) appointment of a specified number of those elected to the Urban Council (a municipal body with limited powers partly elected on a very limited franchise);

(c) extension of the Urban Council's field of responsibility.

There are, however powerful objections to these suggestions: (a) is likely to create the same difficulties with Peking as any move towards more widespread elective processes; (b) does not

take account of the generally unrepresentative character of those elected to the Urban Council; and (c) will lead to undesirable

fragmentation of power within so small a community.

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15.

In these circumstances, the machinery of Government is

developing on unique lines. The present Governor's intention is to produce a more local and less alien government, encouraging

and organising public participation at all levels designed to

create cohesion and a sense of local identity based upon civic

pride. He has increased the number of Advisory Boards which provide an opportunity for those outside government to make their views known on a wide variety of topics, and has sought to widen

representation on them. He also initiated the system of Mutual Aid

Committees, initially designed to combat crime but subsequently

adapted as a link between the population at large and Government

over a wide field of neighbourhood issues. Plans for further

institutional development follow four principal lines of approach:

(a)

increasing contacts between the local institutions (including the Mutual Aid Committees), and local representatives

of the central Government (such as District Officers and their

liaison staff) ;

(b) drawing Unofficial Members of the Legislative Council from

a wider social background, including community leaders identified

from the local institutions mentioned at (a) above;

(c)

appointing in due course, "Ministers" (care will be needed to find a term to take into account Chinese sensitivities) for major

fields of Government policy from among the Unofficial Members of

the Executive Council who would be answerable for them in the

Legislative Council; and

(d) localising the Civil Service as much as possible bearing in

mind the need to maintain a proportion of expatriates to maintain

confidence in the continuance of the colonial link.

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