TNAG-1013-FCO40-1263-Hong-Kong-annual-review-for-1980-1981 — Page 4

CONFIDENTIAL

FOREIGN AND COMMONWEALTH OFFICE

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DIPLOMATIC REPORT No. 107/81

General Distribution

RECEIVED IN REGISTRY NO. 51

2 1 MAY 19.1

DESK OFFICER

INDEX

PA

RECISTRY Action Taken

HONG KONG: ANNUAL REVIEW FOR 1980

thalls

The Governor of Hong Kong to the

HONG KONG 19 January, 1981

Secretary of State for Foreign and Commonwealth Affairs

SUMMARY

The influx of immigrants from China. Measures to halt illegal immigration eventually successful (paragraphs 2-4).

2. Over 21,000 Vietnamese boat refugees still await resettle- ment (paragraph 5).

3. Economy did well, but high rate of export growth declined markedly in the second half. Inflation at 15 per cent coupled with immigration held down real wages. Though unemployment is low it is rising steadily. Real estate and stock exchange booms (para- graphs 6-8).

4. Strong budgetary situation. Government programmes on course. Public housing programme at last fairly satisfactory. First year in which all children under 15 were in free education (para- graph 9).

5. Plans for reform of local administration (paragraph 10). 6. Staff relations eased in the public service (paragraph 11). 7. Take-over of some old established firms by local Chinese interests (paragraph 12).

8. Her Royal Highness Princess Alexandra opened first section of Mass Transit Railway (paragraph 13).

9. Modernisation of Kowloon/Canton Railway (paragraph 14). 10. New Defence Cost Agreement signed. Size of Garrison to be increased to five major units (paragraph 15).

11. Hong Kong's relationship with the UK on good basis. But local storm blew up over UK university fee increases, the Nationality Bill, and CAA decision about cabotage route. UK exports to Hong Kong over £550 million (paragraphs 16 and 17).

12. Relations with China continue to improve, with official visits a normal feature of life. Widespread local investment in Guangdong and China. Possibility of jointly operated nuclear power station (paragraphs 18-20).

13. Increasing breadth of official and commercial contact is improving mutual understanding and should assist eventual discus- sion of Hong Kong's future. But Chinese at present preoccupied with own problems (paragraph 21).

CONFIDENTIAL

20985-107 13245-14

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