TNAG-0542-FCO40-637-Strength-of-garrison-in-Hong-Kong-1975 — Page 68

CONFIDENTIAL

Reference..............................................

Dar. (Rodgers

Visit

Mr Janyrin (Hong Kong & Indian Ocean Dept

Janyrin

- K 245)

fil

$11914 (294)

HONG KONG BRIEFING FOR MINISTER OF STATE'S VISIT

w/282

2.

Your minute of 9 September: a draft brief is attached.

When we spoke, I suggested it would be helpful if a statistical annex were also provided, covering such matters as: population size; gross domestic product; external trade (in value and quantity terms); money supply; balance of payments; building and construction activity (public and private); private sector rents; consumer prices; wage rates; employment; government revenue and expenditure; and the size of the reserves. The data should not be too diffi- cult to assemble, but the tables could involve a fair amount of typing (depend- ing in part on the time period to be covered) and I think, therefore, it will be necessary to reach a decision on precisely what is required as soon as poss- ible. It will also be important to ensure that the figures used in the final version of the brief are consistent with whatever appears in the annex (perhaps I should take this aspect on board myself).

3. You will see that the brief considers, first, Hong Kong's phenomenal economic performance in the 1960's and then, secondly, outlines the events that, at least in the eyes of the local administration, have served radically to constrain the government's room for manoeuvre. Whilst you may well wish to re-word and amend the actual text, I do feel it is important that this basic approach be retained. The fact is that the government genuinely feels that it is just not now the case that Hong Kong is awash with money, and that the low proportion of defence expenditure to the gross domestic product is not now really such a relevant criterion as MOD may be inclined to think. The brief helps to explain the rationale behind this thinking, though suggests that the Hong Kong case may be overstated.

4. You will also see that I have not referred, other than very obliquely (in paragraphs 18 and 34) respectively) to restrictive trade agreements and to the Mass Transit Railway project. I am not certain that there is really very much that can usefully be said here, but you may, nonetheless, wish to see them dealt with rather more explicitly.

5.

Finally, I wouldn't myself think it necessary to consult the Treasury (or the Bank of England) for that matter) unless it is thought important to go into a fair degree of detail on the Sterling Guarantee Agreement/Exchange Fund Guarantee Scheme.

АА

G H Dart

CODE 18-77

3 October 1975

CONFIDENTIAL

Economists Dept G 71B/G