TNAG-0569-FCO40-702-Planning-paper-on-Hong-Kong-1976 — Page 118

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ANNEX C

INTERNAL FOLICIES OF THE HONG KONG GOVERNMENT

Background

1. Hong Kong's post-war development, despite a seven-fold increase in the population, political uncertainty and a total

absence of natural resources has been remarkable. In the

period 1945-71 (and particularly after 1961) the Colony achieved a remarkably high rate of growth with steadily increasing real wages per head (about 5% per annum), full employment, a sound balance of payments and relatively little inflation. success was the result of five principal factors:

This

(i) the rapid growth of post-war demand in its major export markets, particularly in North America and Western Europe;

(ii) a plentiful supply of labour used to very low cash incomes and sociological attitudes peculiar to an immigrant society;

(iii) an inflow of entrepreneurial and financial expertise from the mainland (and, in the early years, an inflow of Chinese capital, mainly from Shanghai) married to the existing efficient financial and commercial

infrastructure;

(iv) a stable and efficient colonial government;

(v) a general climate favourable to investment eg the

tax structure, absence of exchange controls and free

port status.

It should be noted that with the exception of (iv), these factors also applied to other countries in the region with good economic development eg Singapore, Taiwan.

2.

Hong Kong's success, against all the odds, has given rise to a widespread belief in influential circles there that

economic growth on this scale could only have been achieved by

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