TNAG-0737-FCO40-941-Hong-Kong-annual-review-for-1977-1978 — Page 3

CONFIDENTIAL

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FOREIGN AND COMMONWEALTH OFFICE

HKK 14/2

HKK 14/2

LAST PAPER

DIPLOMATIC REPORT No. 142/78

General Distribution

RECEIVED W REG.STRY MO. 5HHONG KONG: ANNUAL REVIEW FOR 1977

D

INDEX

2 8 JUL 1978

PA

No 16

REGISTRY

The Governor of Hong Kong to the

ActionSeetary of State for Foreign and Commonwealth Affairs

Chr

SUMMARY

HONG KONG

8 March, 1978

Hong Kong achieved 12 per cent growth in real terms (para- graph 2).

2. Confidence has been little impaired either by the Multifibre Textiles Arrangement negotiations, or by the near-mutiny in the Police. Good relations with China have helped (paragraph 3).

3. Substantial progress has been made in labour legislation, education, social welfare and social security, housing, provision for leisure, roads and railways, reform of the New Territories Administration, and expansion and requirement of the Police Force (paragraph 4).

4. The increase in real terms in public expenditure achieved in the Budgets of 1977/78 and 1978/79 was 16 per cent and 21 per cent respectively (paragraph 5).

5. The impact of protectionism. The Hong Kong Government is encouraging both diversification of industry, and improvement of the British share of the market. The latter could also help to contain UK critics (paragraphs 6-8).

6. The near-mutiny of the Police came at a time when the joint efforts of Police and ICAC had turned the tide on crime and reduced corruption to acceptable levels (paragraph 9).

7. Though the immediate cause of the breakdown was ICAC pressure, the rapid expansion and reorganisation of the Force were contributory factors. A partial amnesty was granted to avoid a breakdown in law and order. The position is outwardly calm but the Force must be rid of trouble-makers before the situation is secure. The power and prestige of the ICAC is so high that there is little chance of a resurgence of corruption (paragraphs 10-11).

8. The pace and pressure of change in Hong Kong inevitably involve risks of an explosion. Since so much must be done so quickly they are acceptable (paragraph 12).

(Confidential)

Sir,

Hong Kong,

8 March, 1978.

I must first apologise for the lateness of this Review. I have delayed it in the hope that time would make clearer the state of the Royal Hong Kong Police Force.

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