TNAG-0278-FCO40-314-Visit-of-Secretary-of-State-for-Foreign-and-Commonwealth-Aff-1970 — Page 10

CONFIDENTIAL

7

Document No. 4

RECORD OF A

MEETING BETWEEN THE FOREIGN AND COMMONWEALTH SECRETARY AND THE GOVERNOR OF HONG KONG AND OFFICIALS IN GOVERNMENT HOUSE, HONG KONG, AT 10 a.m. ON SUNDAY, 19 APRIL, 1970

Present:

The Right Hon. Michael Stewart, MP

Sir Denis Greenhill

Mr. J. Wellbeloved, M P

Mr. James Murray

Mr. J. A. N. Graham

Miss E. Booker

Mr. N. J. Barrington

HE Sir David Trench Lieutenant-General Sir Basil Eugster

(Commander, British Forces)

Sir Hugh Norman-Walker (Colonial

Secretary)

Mr. D. T. E. Roberts (Attorney-

General)

Mr. D. R. Holmes (Secretary for Home

Affairs)

Sir John Cowperthwaite (Finance

Secretary)

Mr. A. F. R. Maddocks (Political

Adviser)

Mr. A. Todd (Defence Secretary) Mr. C. P. Sutcliffe (Commissioner of

Police)

Internal security

Sir David Trench said that the Communists in the Colony had been told to lie low and broaden the base of their support. They had made some progress in sections of the trade union movement, in the transport companies and in the port. Only 2.5 per cent of the schools were under their control. There was less Communist influence in the Press than before 1967 and their efforts in cultural activities were in disarray. In banking and commercial life they behaved like good capitalists and made as much money as they could.

2. Communist tactics were to distort the facts about, and exacerbate any difficulties which arose in Hong Kong, such as increases in bus fares.

Administration and economy

3. Sir David Trench said that the confrontation with the Communists in 1967 had meant some loss of momentum in the conduct of the ordinary business of government. In 1968 the files had been dusted and there had been a movement forward. In 1969 there had been considerable progress in the field of labour legislation, public assistance, etc.

4. Sir John Cowperthwaite said that the 1967 troubles had not affected the economy. With growth of confidence since then and world inflation the economy was in a very vigorous state with high exports, increased demand for labour and rising wages. The fiscal effect had been a fast rise in revenue and a slow rise in expenditure, producing large surpluses. There was now some secondary inflation,

CONFIDENTIAL

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