XN000022-1976-09-30 — Page 11

Thursday, September 30, 197€

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"You catch us at a moment of some physical disarray. Many

streets are torn up and the city's appearance is marred by construction

plant for an underground railway. It is an extraordinary fact that

Hong Kong, which has no natural resources except a harbour and people

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though very remarkable people should have so developed that it needs

such a vast project. It is symbolic of the transformation in a short

quarter century of a comparatively small entrepot trading post into a

great industrial and financial centre.

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"This transformation is due primarily to the enterprise and

energy of the people of Hong Kong themselves and to the goodwill they have

established with their trading partners. Also I suppose a little to the

credit of their Government.

But it has been made possible by the essential

support and guidance of the United Kingdom and the friendly relations that

exist with the Peoples' Republic of China.

"Hong Kong's international circumstances require it to be a

Dependent Territory

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and this description sounds anomalous and old-fashioned.

But there is nothing old-fashioned about Hong Kong. Its atmosphere, es

you will have felt, is modern, alive, vigorous and free. With a free

press, an independent judiciary, and its specially evolved processes of

communication between people and Government, in respect of civil liberties

Hong Kong can hold its head high.

"It is our aim to balance prosperity and economic growth with

social progress. Hong Kong is best known for the emphasis it places on the

free operation of market forces, and its comparatively low level of taxation.

This is true and for special practical not doctrinaire reasons we think these

beneficial. Because Hong Kong is totally dependent on two things: firstly

on the retention and attraction and growth of investment to employ its

population - hence the need for a comparatively attractive level of taxation;

and secondly on the sale abroad of virtually all its products and the purchase abroad of its raw material. Because it depends so greatly on economic conditions in its markets abroad, it must be able to adjust to them and to adjust fast hence the need to allow market forces to work. I do not think that any other community in the world is subject to the same economic

factors to the same degree.

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But