TNAG-0453-FCO40-518-Budget-of-Hong-Kong-1974-1975-1975 — Page 179

RESTRICTEND

GNP

Food

wy 87%

50%

For an economy enjoying virtually full employment but practically devoid of natural resources, this strong upward trend of investment is most encouraging. One would like to know how far this favourable trend from 1968 to 1972 may have continued into 1973.

Public sector investment

19. Last year's breakdown between public sector and private sector investment (Table 15) was instructive. It showed how the proportion of public sector investment diminished from 19% of gross domestic capital formation in 1966 to 12% in 1971.

1

20. This year no general breakdown is given except for building and construction in Chapter. 4. There is only an indirect reference in Chapter 1. But if, as stated in paragraph 8, government consumption expenditure has been fairly stable at about 6% of GDP, government capital expenditure would appear from Table 5 to have been increasing annually from about 6% of GDP in 1969 to about 7% in 1971, 9% in 1972 and 10% in 1973. However, 12% of total gross domestic capital forma- tion in 1971, which was 24.2% of GDP, would yield a public sector investment share of only 2.9% of GDP. Some explanation of the position would be appreciated.

Employment trends

21.

Except for Table 33 (which extends to 1971 only) Chapter 6 con- centrated exclusively on manufacturing employment. There are some disturbing trends here but little comment thereon. Firstly, the growth of registered manufacturing employment shows a sharp decline :-

Increase in manufacturing employment (twelve months to September)

1969: 1970

14.6%

1971

1972

1973

4.6%

4.60

0.7%

0.0%

Secondly, job opportunities in manufacturing industry werecalso declin- ing :

Reported vacancies as % of registered manufacturing employment

as in September)

1969

1970

3.5%

1971

3.8% 3.395

1972

1973

3.2%

1.5%

Thirdly, real wages in manufacturing show a sharp downturn in 1973 :- Nominal manufacturing wage increases and consumer price increases

twelve months to September

1969

1970

1971

1972

1973

Wage rates

1

rise ... 14.2% Price index

17.6%

1516%

10.6%

11.30

rise

2.3%

6.490

5.3%

4.4%

15.0%

The 1973 trends are particularly disturbing for an economy which depends so heavily on domestic manufacturing exports. Despite the continuing population increase and influx of refugees from the mainland (for which Hongkong receives no external aid) manufacturing employment appears to have remained static over the past year or two. Again, the fact that in 1973 consumer prices have been rising much faster than

/nominal