TNAG-0750-FCO40-954-Visits-of-Sir-Murray-MacLehose--Governor-of-Hong-Kong--to-UK-1978 — Page 8

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that the Governor's latest proposals for appointing new

members to the Executive and Legislative Councils would not do more to broaden the social base of the Councils. He was surprised

at the Governor's contention that there were no suitable

Chinese ready for appointment. He asked whether the Governor had considered the two possible candidates, Mr Chang and Dr Chen, whose names had been suggested to him by Mr John Stewart. The Governor explained that both had been considered but, in his view, were not suitable. He pointed out that the membership of the Councils was very different now from what it was five years ago. There was no lack of voices speaking for ordinary people. The Governor confirmed that he was anxious to appoint a professional economist to the Legislative council, but the best prospective candidate was still too young and inexperienced. Mr Cortazzi expressed surprise that the Chinese population of Hong Kong could not produce enough suitable candidates. Mr Stewart was certain that good candidates would soon appear.

4. The Governor had just heard that a further vacancy would arise at the end of next month on the legislative council. He would therefore be reconsidering his recommendations to take account of this, and of the discussion.

5.

Lord Goronwy-Roberts congratulated the Governor on his paper on the development of Hong Kong beyond 1980. He believed such a study was worthwhile even though the Secretary of State may now have to postpone his visit. On a number of points in the paper, for example education, housing and health, we agreed with the Governor's proposals, subject only to a few minor reservations on points of detail. On education, the Governor said that he was considering asking an independent body such as the OECD to carry out a detailed review of the Hong Kong system. On economic and commercial policy, Mr Stewart repeated the view expressed in the report of his recent visit to Hong Kong that the Government should be prepared to play a more direct role in managing the economy. He accepted that Hong Kong's economy is unique but remained convinced that there was still too much emphasis on a balanced budget. He believed that there is more

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scope for flexibility.

He was not convinced that, as it became necessary for Hong Kong to move up into more sophisticated and capital intensive industries, the traditional Hong Kong system of many small companies rapidly adapting to changing needs would be sufficient. The Governor pointed out that the

Government are already used to intervening in many ways. The Advisory Committee on Diversification, which should be report- ing on its conclusions by next Spring or Summer, will be advising on what further action is required, if any. The Governor believed that Hong Kong had already shown its ability to move up market if necessary. He said that the incentives provided by subsidised land prices to suitable industries were much more practical than the fiscal incentives which Mr Stewart had suggested might become necessary.

6.

Lord Goronwy-Roberts confirmed that the Secretary of State accepted the need for the present policy of repatriating illegal immigrants from China, provided that the policy was applied humanely and that we remained convinced that those who were repatriated were not harshly treated. On the problem of legal immigration Mr Murray wondered whether those emigrating helped to redress the balance of the increasingly large numbers of immigrants. The Governor said the numbers of immigrants now far exceeded the numbers of emigrants, and that it would take a further month or so before the representations that had been made to the Chinese could be expected to have any effect. He suggested that a short press statement should be issued to the effect that he had raised the subject with the Minister and that they had agreed that a careful watch should be kept on the position.

7. On the Hong Kong police, Lord Goronwy-Roberts said that he was pleased with the recommendations made by the Home Office team led by Mr Crane. He welcomed the Governor's agreement to regular inspections of the force in future. He was glad to see that this would include an inspection of the Hong Kong Special Branch. The Governor confirmed that he intended to

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with Sir Colin Woods the possibility of a return visit to Hong Kong next year by Mr Crane to review the implementations of his proposals.

8.

Lord Goronwy-Roberts said that he was glad to note that the interim report of the committee of inquiry looking into the dispute at the Golden Jubilee Secondary School seemed likely to lead to a satisfactory settlement of the dispute. He said that he was also glad to see that the dispute involving the Government Shorthand and Audio Typists had been resolved. Lord Goronwy-Roberts concluded by thanking Mr Cater for his valuable work as Independent Commissioner Against Corruption, and wished him well when he takes up his new appointment as Chief Secretary in the Autumn.

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