XN000022-1973-05-09 — Page 5

Wednesday, May 9, 1973

"So, the two inflationary elements that have been present in the

internal Hong Kong economy are now operating much less strongly and the

underlying reality is beginning once more to reassert itself," he said.

This reality, he went on, was the continuing growth in Hong

Kong's national income and underpinning it a continuing expansion in

its external trade.

Mr. Jones said that to the extent that Hong Kong's rising living

costs were imported from the outside world "there is very little we can do

about it with our open economy.

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But the government had taken "practical action" which had helped

the situation.

These included:

maintaining a stable exchange rate for the Hong

[Kong dollar; maintaining a free market with no restrictions (this had

enabled Hong Kong to obtain its imports from the cheapest available sources); maintaining "buffer stocks" of rice (which helped smooth out prices in times of shortages); and instituting expanded public housing and social welfare

programmes.

He noted that in the first quarter of this year, Hong Kong's domestic exports were up 13.9 per cent over the same period last year. Imports had

risen by 19.5 per cent during the same period, while a "phenomenal growth" of 34.6 per cent was recorded in Hong Kong's re-export trade.

Invisible earnings from tourism, shipping, finance and commerce were also continuing to increase while record profits were being recorded by companies throughout Hong Kong.

"This is not a picture of a stagnating economy pricing itself out of world markets but of a dynamic expanding economy sustained by high investment and a growing demand for its products and services."

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