TNAG-0309-FCO40-345-Contributions-of-Hong-Kong-for-costs-of-maintaining-military-1971 — Page 85

NOTHING TO BE WRITTEN IN THIS MARGIN

who claims that

thi's will mean a

عبید

£4m

SECRET

avoid unemployment with its attendant threat to

internal security (it is estimated that 50% of the total

population of the Colony is under 21 years of age).

Such expansion depends on a continuation of the present

high levels of outside investment in the Colony and the

opinion is strongly held locally that this in turn

inhibits any increase in taxation to meet increased

defence costs.

17.

1

Though in recent years Hong Kong has achieved

budget surpluses (to a large extent because the

Government's ability to spend has not kept pace with the

}

upsurge in economic activity since the end of the

disturbances in 1967), the Colony has very large

commitments towards such future projects as a public

assistance scheme, expansion of secondary and technical

education, housing for squatters and others, the

extension of Kai Tak airport, de-salination plants and

reservoirs to help meet its growing needs for water;

and possibly a mass-transportation (underground railway)

system.

18.

Moreover, Hong Kong's economy is largely dependent

on its trade with the outside world. It is

accordingly very vulnerable to external influence over

which the Colony has little or no control. An example

tis

of such influences is Her Majesty's Government's

*

decision to move from quotas to tariffs on 1 January 1972

in the field of cotton textiles. This is, in fact,

amongst the matters raised by the unofficial members, S

loss of annually to the

It was in the light of the above factors that in Hong Kong economy 19.

February the Secretary of State, in conjunction with

Treasury Ministers, the Minister of Defence and the

- 3 SECRET

/Secretary of State