TNAG-0607-FCO40-755-Monitoring-progress-made-on-planning-papers-on-Hong-Kong-1977 — Page 117

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full employment, and a substantial increase in household incomes.

Despite the slow down in textile exports there is still a eneral shortage

of labour, due particularly to higher demand in the building, constructio

and service industries. Real vages have been increasing since the

start of our recovery in the first half of 1975, and we think that total

earnings for the labour force have increased this year faster than the

growth in manufacturing output. The economy has thus worked well by

ensuring that the labour force benefited from growth.

12.

Turning now to our performance in 1977. On the domestic front

there has been a marked increase in consumer spending, following the

growth in incomes in 1976 and this year. The construction industry has

expanded with unexpected speed to meet the heavy demands made on it by

the public and private sectors, and this has contributed to raising the level

of investment in plant and machinery to above the budget forecast.

13.

Growth in domestic consumption and investment has been so striking

that the growth of GDP in real terms may be as high as although our export

W

performance has been uneven. Some products have done exceptionally well,

but textiles and clothing have been disappointing, and our overall export

performance this year is expected to be no more than 45 abov

lost year

in real terms. The United States excepted, our main customers scem to

be holding a high level of stocks, and appear to be able to meet a good

part of their limited requirements at the moment from less expensive!

suppliers than Hong Kong.

14.

Turning now to the outlook for 1978, we all have very much in

our minds the forthcoming bilateral negotiation with the EEC on textiles.

The Community shows every sign of wishing to impose on us a more

restrictive regime than hitherto. The principal features would be a roll-

back of quotas for 1978 to the 1976 level of imports; but for 8 sensitive

items, for so-called 'principal suppliers' only - and Hong Kong is one of

/these...