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now be adopted including compensation trade and the processing of materials imported from abroad.
The Governor thanked Mr Li for this account of China's modernisation programme and was pleased that Hong Kong might play a role. The Hong Kong economy was good; over the last 3 years there had been a 10 per cent growth in real terms. Hong Kong could not hope to continue growth at this rate but new towns were being built to cope with industrial expansion and investment was being made in technical education. leople in Hong Kong were very interested in China's plans for expansion of their economy and he had read reports in the papers about the development plans for Guangdong Province. The timing of his visit was just right to allow him to hear more about this. He had had successful discussions in Guangzhou covering water supplies, the Hong Kong/Guangzhou railway, electricity, shipping, tourism and the development of Shenzhen. There was scope for cooperation in most of these areas; in others cooperation was not necessary. It had been agreed that these matters would be discussed again when he returned through Guangzhou.
5. Mr Li remarked that the Governor would be returning to Hong Kong through Guangzhou on the first through-train service on 4 April. The Governor said that both Hong Kong and Guangdong could benefit from a division of labour. Some work could be done in Guangzhou, some in Shenzhen, and some in Hong Kong. Mr Li suggested that th Governor should talk to the authorities in Guangzhou and Guangdong about this. Guangdong might be able to increase the supply of water to
The Governor Hong Kong but would like electricity in return. pointed out that Hong Kong was a very good market for products from Guangdong. Every family in Hong Kong used US$ 40 worth of food and clothing from Guangdong every month and this only represented part of the trade. This was good for both Hong Kong and Guangzhou but in order to pay for these imports, Hong Kong must be able to export successfully to Europe and America.
4. Mr Li said that Hong Kong was an excellent centre for international travel. Many visitors to Hong Kong bought things there as well as using the hotels because Hong Kong goods were very reasonably priced. Hong Kong was able to earn foreign exchange by buying raw materials and selling finished products. The Governor agreed but pointed out that this was
Mr Li said not as good as having one's own raw materials. that Hong Kong nevertheless managed very successfully. her prices not lower than e.g. Singapore, because wages were a little lower? The Governor said that in fact the average disposable income was a little higher in Hong Kong than in Singapore, but various fringe benefits might be a little greater in Singapore.
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