TNAG-0622-FCO40-770-Budget-of-Hong-Kong-1977 — Page 48

In J.A.B. Stewart (HRE)) } Lee

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CONFIDENTIAL

gives you

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to say. Ch. 8/6.

SECRETARY OF STATE

HONG KONG BUDGET

Mh Specsant

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Written Blur. 13/6.. Dutty on ce as into Jalls Faler

you

1. A perennial concern of the FCO, as you may know, is to try to get the Governor and Financial Secretary of Hong Kong to frame the annual Hong Kong budget in 20th century rather

than 19th century terms. More specifically, they need to be

continually pressed to use the Hong Kong budget as an

instrument of economic policy, and not just to concentrate on balancing the colony's financial accounts without any

reference to wider economic or social considerations,

2. In particular, the ratio of public expenditure to GDP is

very low in Hong Kong, has shown no clear trend over the past 4 years, and is no higher than it was 7 years ago (see table at Annex). When this particular aspect of the situation came up some months ago, I understand that Tony Crosland said that

he attached particular importance to a rising level in real and proportionate terms of public expenditure.

3. Do you agree that Hong Kong and General Department may attribute similar views to yourself in a letter they are

sending to the Hong Kong Financial Secretary?

Cuff.

Michael Stewart

30 May 1977

REA

REGI. 51

17 JUN 1977

4KK 100/2

CONFIDENTIAL