XN000022-1991-02-20 — Page 5

WEDNESDAY, FEBRUARY 20, 1991

THE ECONOMY

AND I CHOOSE THIS MAINLY BECAUSE THE WORLD ECONOMY AT THE MOMENT IS IN A DIFFICULT SITUATION AND THE GULF CRISIS MAKES THAT POTENTIALLY WORSE. AND I THINK ITS WORTHWHILE, IN THAT SORT OF CONTEXT, LOOKING AT WHAT'S BEEN HAPPENING WITH OUR OWN ECONOMY HERE AND THE WAY THAT IS RESTRUCTURING, AND THE WAY IN WHICH WE AS A RESULT OF THAT ARE, I THINK, HELPED IN TERMS OF THE WORLD ECONOMIC PROBLEMS GOING ON AT THE MOMENT. THE MAIN RESTRUCTURING, QUITE CLEARLY, OVER THE LAST DECADE, IS THE WAY IN WHICH WE ARE GOING TOWARDS BEING A SERVICE-ORIENTATED ECONOMY: SERVICES NOW AMOUNT FOR SOME 70 PER CENT OF OUR GDP: AND IF YOU THINK IN TERMS OF THE WORKFORCE, ABOUT 60 PER CENT OF OUR WORKFORCE IS NOW IN SERVICE-ORIENTATED INDUSTRIES AS OPPOSED ΤΟ SOMETHING LIKE 40 PER CENT IN 1979. SO THERE IS A CLEAR SHIFT IN THE WAY ECONOMY IS STRUCTURED. IT HAS CREATED IT'S OWN PROBLEMS, AND EVERYBODY KNOWS ABOUT THE PROBLEMS, THEY ARE MUCH REPORTED, WE HAVE A LABOUR SHORTAGE; THE ECONOMY HAS BEEN GROWING SO RAPIDLY; WE NEED SO MANY MORE PEOPLE IN THE SERVICE SECTOR THAT WE DON'T HAVE ENOUGH OF THE TALENT WE NEED AND WE HAVE SUFFERED ALSO FROM THE BRAIN DRAIN, SO THOSE TWO THINGS GO TOGETHER.

PARTLY AS A RESULT OF THAT, BUT OTHER FACTORS TOO, WAGES HAVE BEEN RISING VERY RAPIDLY AND WE HAVE TO WATCH OUT FOR THE PROBLEM OF PRICING OURSELVES OUT OF OUR OWN MARKET. AND THIRDLY, WE HAVE BEEN SUFFERING FROM EXCESSIVE INFLATION. WE'RE NOT ALONE IN THE WORLD IN THAT, BUT IT IS A PROBLEM WHICH WE DO NEED, IF WE CAN, TO TRY TO GET UNDER CONTROL. BUT OUR ABILITY, OUR LEVERS TO DEAL WITH THAT ARE VERY LIMITED.

BUT THERE ARE TWO AREAS WHICH ARE PLACES WHERE ONE CAN LOOK AT WITH A GREATER DEGREE OF OPTIMISM, AND I'D LIKE TO POINT то THOSE. THERE ARE TWO ASSETS, AS IT WERE. ONE IS THE CONNECTION WITH CHINA, AND PARTICULARLY WITH SOUTHERN CHINA WHICH HAS GROWN ENORMOUSLY OVER THE LAST 10 YEARS. IT SOMETIMES STRIKES ME WHEN I HAVE VISITORS COMING HERE WHO HAVEN'T BEEN IN HONG KONG IN THE PAST. AND I TAKE THEM AS I SOMETIMES DO, BY HELICOPTER TRIP UP TO THE BORDER. YOU LOOK OVER THE BORDER ΤΟ SHENZHEN. IT IS PROBABLY IMPOSSIBLE FOR THOSE PEOPLE TO REMEMBER AS I DO, AND I'M SURE MANY OF YOU IN THIS ROOM DO, WHAT SHENZHEN LOOKED IN 1978. IT WAS JUST A RAILWAY STATION, A VILLAGE. NOW AS YOU LOOK ACROSS THE LOW HILLS AT THE BORDER, YOUR HELICOPTER TURNS FAST. IT'S DIFFICULT TO TELL LOOKING AT CHINA OR AT HONG KONG. THAT IS THE NATURE RAPID CHANGE.

SMALLISH AND IF WHETHER YOU'RE OF THIS VERY

/OUR OWN

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