XN000022-1976-03-29 — Page 11

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In fact, the share of retained imports in apparent consumption seems to have

reached a peak in the last four years. Retained imports captured 36% of the

market in 1972, declined to 34% in 1973, fell sharply to 24% in 1974 and then

recovered to 34% in 1975 when apparent consumption was at an all time record

level of 557 million pounds, an increase of no less than 30% on the previous

high of 427 million pounds in 1973.

I accept that the prices at which imported yarns are offered by

overseas suppliers are highly competitive, but are you seriously suggesting

that we should abandon our free trade policy in the face of such competitive

prices and at the expense of the external competitive position of our piece-

goods and garments? Surely not, for a protected market for the spinning

industry in Hong Kong which damaged the external competitive position of our

textile industry generally would quickly destroy demand for your yarns. In

any case, I do not believe that the Hong Kong spinning industry with its well

proven capacity for survival will not react positively to such competition by

pioneering new cost effective production techniques. The Hong Kong spinning

industry has lived through, and survived, many changes in the past 10 years

(and the industry's production in 1975 at 382 million pounds was nearly 100

million pounds up on 1965); and there are more changes to come. These you must

likewise survive, but in the certain knowledge that the Government will not

offer you any form of special assistance which is contrary to the general

thrust of our fiscal and economic policies. These policies, which would be

put generally at risk were we to start making exceptions, should in themselves

provide you with a perfectly adequate climate for survival, if survival is

/consistent