TNAG-0844-FCO40-1054-Visit-of-Lord-Carrington--Secretary-of-State-for-Foreign-and-1979 — Page 6

CONFIDENTIAL

Sir Murray Maclehose said that the attraction of the bright lights was a subject of critical comment in the press in Guangdong. Lord Carrington asked if it would be possible to stamp the cards of legal immigrants and send them back after 15 days.

Sir Murray Maclehose said that this would be difficult for the Chinese but it would have to be done if the numbers did not come down.

12. Mr Haddon-Cave said that population growth in Hong Kong was running at 1.8%. Hong Kong had aimed to have a static population by the mid-1980s and had been on target prior to the upsurge in immigration from China and Vietnam.

REFUGEES

13. Sir Murray Maclehose said Hong Kong was waiting to see what resettlement terms came out of the UN conference. He had agreed to Mr Hartling's figure of 10,000 refugees for Hong Kong provided it was part of an overall solution to the problem as a whole. Mr Davies said that 16% of the Vietnamese refugees in Hong Kong were Vietnamese and not ethnic Chinese. In the first week of June the proportion had risen to 28%. Sir Murray Maclehose remarked on the mounting irritation of the Hong Kong population at the influx of refugees and on the need to take steps to solve the problem before it became uncontainable.

HONG KONG ECONOMY

14.

Mr Haddon-Cave said that the Hong Kong economy had enjoyed a growth rate of 17% over the last three years. Hong Kong was, however, now facing demand/pull inflation in a serious form and was threatened with a rate of inflation that was causing anxiety in the Colony. The fact that Hong Kong was now on a floating rate made budgetary policy increasingly important. Hong Kong had tried to slow down the economy and to balance demand and supply. Action had been taken to narrow the widening trade gap and the growth rate of Hong Kong's exports was now higher than that of its Imports. Oil currently represented some 6-7% of Hong Kong's total import bill but that overall bill was so large that any increase in the oil element would be partially masked. Of much greater concern was the knock on effect on the world economy caused by sharp increases in the oil price and the consequent impact on Hong Kong.

PS (2)

PS/LIS

PS/Mr Blaker PS/PUS

Sir I Sinclair Mr Cortazzi

Mr Murray

FED

HKGD

HM Representatives:

Peking Hong Kong

CONFIDENTIAL