TNAG-0478-FCO40-543-Strength-of-garrison-in-Hong-Kong-1974 — Page 123

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FM HONG KONG 398715 Z

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Hol AKIOD

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Dief Dept

SECRET

TO FLASH F C O TELEGRAM NUMBER 877 OF 30 AUGUST.

YOUR TELEGRAM NUMBER 752.

LAST

+

87

REF

RE! REGIST

IN

0.51

· 3 SEP 1974

;-

DEFENCE REVIEW.

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REF

FOLLOWING FROM ACTING GOVERNOR.

HKK 10/9.

IN THE SHORT TIME AVAILABLE, I DO NOT FEEL THAT I CAN ADEQUATELY COMPLY WITH YOUR REQUEST FOR A BALANCING'' PASSAGE

BY 6800 HOURS. INSTEAD, I SHALL COMMENT AT SOME LENGTH ON THE DRAFT TREASURY PASSAGE CONTAINED IN YOUR TELEGRAM NUMBER 753

IN THE HOPE THAT IT CAN BE AMENDED. YOU DO NOT SAY WHAT THE

TREASURY PASSAGE IS MEANT TO ACHIEVE. I ASSUME IT IS INTENDED

TO SUPPORT AN ARGUMENT FOR HONG KONG BEARING THE FULL COST OF

THE GARRISON,

2. NEEDLESS TO SAY, I AM ALARMED THAT SUCH A VITALLY IMPORTANT AND POLITICALLY SENSITIVE ISSUE AS DEFENCE COSTS SHOULD BE RUSHED IN THIS WAY AND I MUST ASK THAT ARRANGEMENTS ARE MADE FOR SIR

MURRAY MACLEHOSE TO SEE THIS TELEGRAM AND YOUR TELEGRAMS 752 AND 753.

3. MY COMMENTS ON THE DRAFT TREASURY PASSAGE ARE AS FOLLOWS: (A) THERE ARE NO ESTIMATES OF GDP BY FISCAL YEARS. IN 1973,

THE GDP GREW AT 8.6% IN TERMS OF 1966 PRICES, BUT THIS

IS AN OVER-ESTIMATE SINCE IT MAKES NO ALLOWANCE FOR

CHANGES IN STOCKS OF RAW MATERIALS AND SEMI-MANUFACTURES.

A CORRECTED ESTIMATE WOULD BE BETWEEN 7% AND 8%1

(B) OVER THE FIVE YEARS 1968-73 THE GROWTH RATE OF THE GDP AT

1966 PRICES HAS AVERAGED 8% A YEAR 1

(C) THE TIMES REPORT ABOUT GROWTH PROSPECTS THIS YEAR (1974)

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