TNAG-1239-FCO40-1552-Future-of-Hong-Kong-1983 — Page 70

CONFIDENTIAL

the traditional heavy industries.

In this case it seems to be

building construction above all which has inflated the heavy

industry figures

-

much of this has been for non-productive

purposes, especially housing. This is less of a threat to the

reformists than would be posed by a deliberate shift of resources

back into the creation of additional productive capacity in

heavy industry.

14. The reports make it clear that organisational reforms will

This is the essential reformist plank. But they are

continue.

to be kept under control, or so it is hoped. While some will

see a return to more centralised control as a move back from

reform this is not necessarily so: in a number of instances the

aim is to push reform harder.

15. The industrial growth target for 1983 looks unrealistically

low, given the figures so far published. If it is greatly

exceeded it seems possible that further draconian measures

of control will have to be taken which could then damage the

reformist policy, reaffirmed by Zhao, of giving a degree of

initiative to enterprises. At present however the greater danger

is seen to be too much unauthorised expansion, diverting scarce

resources away from key projects which are really essential for

the future growth of the economy, and also from light industry.

CONFIDENTIAL

/c) Agriculture