TNAG-1167-FCO40-1447-Future-of-Hong-Kong-1982 — Page 3

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in manufacturing in Jane was the highest on record.

Though the September figure showed a slight decline this

was more than offset by an increase in the services sector,

and the total employment figures for September recorded the

highest number of people ever employed in Hong Kong.

8.

Drastic reduction in illegal immigration has been

a great relief. Our population is estimated to have increase

by 1.7% in 1931 compared with 3.2% in 1978, 5.1% in 1979.

and 2.6% in 1980. While I would still like to see the

number of legal immigrants reduced, this is a much improved

situation. We can now get back on to the course in which

economic growth reflects higher productivity and an improved

standard of living, and not just more people working.

The

latter situation frustrated the incentive to technological

advance and higher productivity on which I am sure our

future depends.

9.

Apart from the uncertain worldwide trading

conditions, the main defect in the economy last year was

inflation. At 15% the rate of increase of consumer prices

was no less than in 1980. Although world food prices have.

been fairly stable, prices for the types of food that we

import increased rapidly, and in particular the fresh food

items. To some extent this reflected movement in the

exchange rate during the year, but not entirely.

10.

Many factors produced the inflation of the last two

years. Some were imported and outside our control; some,

though domestic, eluded our control. In particular the