TNAG-0735-FCO40-939-Policy-objective-for-the-developing-of-Hong-Kong-in-the-1980-1978 — Page 204

- 29 -

74 However there is the problem of the present imbalance

between the growth rates of domestic demand and of imports

on the one hand and of exports on the other. The natural

effect of this situation on our exchange rate should

discourage imports and encourage exports. If, as we

expect, there is a budgetary surplus again this year,

this too should help to restrain demand. While these

problems are real enough and we must watch them, they

are not large in comparison to those facing most other

countries.

I hope the forces I have referred to will achieve,

gently, the necessary adjustment. However if this

natural process were to be delayed or distorted by

other factors such as, for instance, over-optimism in

the real estate market, the adjustment could be

deferred until it would inevitably be sharper and

more painful.

for Expansion

Government Plans/1978 mid 80s

76

It is against this background that I will now

describe your Government's plans for Hong Kong as

it moves out of the 70s and into the 80s.

*