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details of the social programme to which the Governor refers. The totals involved are impressive. The Governor accepts that, if this programme requires a somewhat less conservative budgetary policy over the next ten years, then this, within reason, will have to be accepted. Thereafter the approaching end to the New Territories lease will put an increasing
emphasis on confidence and stability.
4. The second despatch describes the new phenomenon, for Hong Kong, of real wages falling 11% in one year.
This goes to the root of why the Chinese population of the Colony choose to live there, and to acquiesce in an alien administration. The Hong Kong Government's remedy is the traditional one of growth. This has worked before, and is really what Hong Kong is all about. The safety-net approach of minimum wages, he and other possib
discussed in the Latrans Adensco recant report have less appeal, and the possibility of keeping wages up by strengthening the trade unions, which wee & subject of the Labour Advigerly recent report, does not get a mention. 5. These two despatches, with the third one, when received, will provide a solid foundation for Lord Goronwy-Roberts talks with the Governor on 18 June. The Minister may also wish to consider whether the Secretary of State should see the despat- ches, before receiving the Governor. Although they are somewhat specialised, the political and administrative problems of our largest remaining dependency are of general interest and I have sent the despatches for printing.
5 June 1974
cc:
PS/FUS
Sir D Watson o.r.
Mr Wilford
Mr Youde
A C Stuart
Hong Kong and Indian Ocean Dept.
Mr Foron (Overseas Labour Adviser) Mr Evans (Far Eastern Dept.)
/ These
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