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Wednesday, March 28, 1973
"If they are suffering inflation, as most of them are and many of them
at rates faster than our own
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this is bound to affect us, either in higher
prices for our imports or in our exporters' ability to obtain higher prices
for their own sales overseas,
he said.
"Given our very heavy dependence on external trade and commerce,
the rate of inflation would have been significantly greater had we heeded
the promptings of some of the exchange rate for the Hong Kong dollar."
Mr. Haddon-Cave recalled that, two weeks ago, some Unofficial Members
had argued the "real inflation engine" operating in Hong Kong's economy
was the "rising cost of land, rents and the state of stock exchanges."
Exaggeration
They had suggested that rising prices in these areas would filter
through the entire cost/price structure and make Hong Kong uncompetitive
in world market.
"I think there are large elements of exaggeration in this picture,"
the Financial Secretary said.
He believed the corrective mechanism built into Hong Kong's economy
had already begun to dampen down exceptional developments.
He said that "as this year wears on, we shall see more and more of the
exaggerated recent features of our economy ironed out by the forces of market."
He added that "in the Hong Kong economy, market forces exercise a
corrective influence, and will continue to do so, provided we are prepared to
face up to some exaggerations in the short term and provided Government
intervention is designed either to replace the market mechanism completely
or correct imperfections in the way it operates."
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