TNAG-0735-FCO40-939-Policy-objective-for-the-developing-of-Hong-Kong-in-the-1980-1978 — Page 244

CONFIDENTIAL

5. I AM INCLUDING A REFERENCE TO HONG KONG'S PERFORMANCE UNDER

ILO CONVENTIONS, IE 40 APPLIED IN FULL OR WITH MODIFICATIONS AND PLANS TO IMPROVE THIS BY A FURTHER SIX BY 1980. THOUGH IT WILL

READ ODDLY HERE, I THOUGHT THIS MIGHT BE OF VALUE AT YOUR END.

6. OUR PROBLEM HERE IS THAT DOMESTIC CONSUMPTION (TO SOME EXTENT

FUELLED BY THE MASSIVE GOVERNMENT CONSTRUCTION PROGRAMMES INCLUDING

THE MTR) IS DRAWING RESOURCES AWAY FROM THE EARNING OF FOREIGN

EXCHANGE WITH CONSEQUENT EROSION OF THE VALUE OF THE DOLLAR.

WHILE WE HOPE MARKET FORCES AND SOME INCREASE IN OVERSEAS DEMAND

AND A BUDGET SURPLUS (WHICH LOOKS LIKELY) MAY ACHIEVE THE NECESSARY ADJUSTMENT, THE PROSPECTS ARE SLIGHTLY WORRYING AND ARE CERTAINLY A MATTER OF PUBLIC CONCERN AT PRESENT. I AM THEREFORE NOT AT ALL SURE HOW THESE PLANS FOR MASSIVE FURTHER EXPENDITURE WILL BE

RECEIVED. NONETHELESS THERE IS MERIT IN GETTING THEM ON RECORD.

MACLEHOSE

FILES HK & GD (6) MR MURRAY

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