TNAG-0103-FCO40-139-Briefs-and-background-notes-for-Lord-Shepherd-1967 — Page 31

CONFIDENTIAL

BRIDE NO. 7

VISIT OF MINISTER OF STATE FOR COMMONWEALTH AFFAIRS

TO HONG KOTII

OCTOBER 1967

Public Finanos Use of ReseZTOS.

The Kinister of State has it in mind to raise in discussion in

Hong Kong the use of the Government's reserves to finance a higheỹ rate

of development in the years immediately ahead as a matter of deliberate

policy. The purposes, it is understood, would bo

2.

(a) to onsure that public confidence (which responded so

well in the face of recent events) is maintained by

such indications of faith in the Colony's long-term

future;

(b) to provide a high level of employment during a period

when the labour force will be rising very rapidly (40%

of the population was under 15 years of age in 1961);

(c) in so far as such a programme of development would provide

better social services and security, to encourag®

loyalty to(and satisfaction with) the Hong Kong Government.

If those purposes were achieved, the problem of resisting sustained

local Communist pressure would be very much easier; the prospects of success

for the local Communist loadership in their policy of attracting mass support

would be considerably reduced.

3.

There is unlikely to be any enthusiasm for this in Hong Kong for the

sort of reasons that are touched in Background Notes No.9. They will

doubtless argue that the physical capacity for a higher rate of development

is vory limited; they will voxy likely show a traditionally narrow view

of the field of government activity.

4. The Minister recently discussed with Mr. Selwyn the size of the

Hong Kong reserves and their possible use, as a result of which Hr. Selwyn

prepared the attached note. Because of the sise of the current proɛramme /development

CONFIDENTIAL