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CONFIDENTIAL
movement forward. In 1969 there had been considerable
progress in the filed of labour legislation, public
assistance, etc.
4.
Sir John Cowperthwaite
said that the 1967 troubles
4
had not affected the economy. With growth confidence
then
since this and the world inflation the economy was in
vigorous
a very kéalthy state with high exports, increased demand f
for labour and rising wages. The fiscal effect had
been a fast rise in income and a slow rise in expenditure,
producing large surpluses. There was now some secondary
inflation, and increased wages and prices would mean a
certain amount of dislocation.
Peoples' experience
of China in the past made them frightened of rising
prices. It was agreed that Hong Kong was in for a
period of more steeply rising prices.
(now
5.
One development was that China was under some strain
The responsibility, es between London and Hong Kong, for the
to supply 4 million people with an increasing standard
Chinese
of living. They were now adopting a cleverer prising
policy looking for maximum returns rather than quantity.
Commercial Negotiations
6. Sir David Trench said that people in Hong Kong,
+
including unofficial members of the Executive and
Legislative Councils, were concerned about conducting of
commercial negotiations, for instance on textiles.
Sir John Cowperthwaite added that local businessmen
felt that they knew better than the Hong Kong Government,
and certainly better than London, what was in their
own interests.
7. Mr. Stewart said that he appreciated this difficulty.
Under normal circumstances, Hong Kong would by now have
become an independent state. The British Government had
to act for the Hong Kong Government in international
negotiations and sometimes had to take decisions where
the interests of the two Governments did not coincide.
connection
One must bear in mind that the communication between
/Britain
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