TNAG-0445-FCO40-510-Discussions-with-Sir-Murray-MacLehose--Governor-of-Hong-Kong-1974 — Page 111

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Introduction

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"1973 was a difficult year for Hong Kong. "Exports in 1973 increased by 28%." As seen from Hong Kong, these are not contra- dictory views. An export orientated economy, almost wholly dependent on international trade and with no raw material resources, is affected in some degree or another by every economic wind that blows. Last year it was raw material shortages and market restric- tions; this year it is oil and rising import prices. But one finds

in Hong Kong little recognition that these are the day to day problems of all exporting countries and that they reflect to choose a motoring metaphor - an uneven road surface rather than the imminent collapse of the suspension. The prosperity of Hong Kong is not to be. taken for granted; but after 21 budget surpluses in 25 years and an almost uninterrupted increase in exports and GDP over the same period (average annual increase in GDP about 7%) some of the comments heard in Hong Kong about the precarious nature of the economy begin to sound a little thin.

Ferhaps

This

2. "The rate of growth of the economy" to quote the Financial Secretary, "is what life is really all about in Hong Kong." so, but observers would also like to see some accelerated sharing of the fruits of growth by the hard-working labour force who make the fast growing economy possible. Wages have risen (from a very low level) by about 5% a year in real terms, but it is doubtful if this represents any appreciable increase in Hong Kong's unit labour costs given the steady rise in productivity over the years**. is reinforced by a recent statement of the Financial Secretary the productivity of labour is likely to increase at a faster rate over the coming years as a result of increased inputs of capital and improvements in production techniques, (though even in the 1960s productivity increased nearly twice as fast as the working population" Hong Kong's success is not based solely on cheap labour. If that were so, one would need to explain why other Asian countries with abundant supplies of cheap labour have not done equally well.

/Wage rates

For a fuller treatment of the wage problem see paragraphs 5

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Labour productivity is estimated to have risen by 207% between 1960 and 1967, while over the same 7 year period the manufacturin wage index rose by 71.5%.

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