TNAG-1373-FCO40-1819-Ministerial-visits-from-the-UK-to-Hong-Kong-1985 — Page 294

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MR RENTON'S VISIT : THE HONG KONG SCENE

INDER

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Action Taken

1. WHEN HE ARRIVES NEXT WEEKEND MR RENTON WILL FIND AN AIR OF

**BUSINESS AS USUAL'' IN HONG KONG. THE SIGNATURE OF THE JOINT DECLARATION REMOVED A LARGE ELEMENT OF UNCERTAINTY ABOUT THE INTENTIONS OF THE CHINESE AND BRITISH GOVERNMENTS AS REGARDS THE FUTURE OF HONG KONG. IT CONFIRMED CHINESE ACCEPTANCE OF BRITISH ADMINISTRATION OVER HONG KONG FOR THE NEXT TWELVE YEARS AND THEIR AGREEMENT THAT THE SOCIAL AND ECONOMIC SYSTEMS SHOULD REMAIN UNCHANGED THEREAFTER. THIS HAS ENGENDERED A SUBSTANTIAL DEGREE

OF SHORT TERM CONFIDENCE AND PROVIDED A BASIS ON WHICH LONGER TERM CONFIDENCE CAN BE BUILT:

2. ECONOMICALLY THE RATE OF GROWTH HAS NOT BEEN AS HIGHT AS IT WAS

LAST YEAR BUT IS STILL EXPECTED TO REACH BETWEEN 4.5 AND 5 PERCENT. UNEMPLOYMENT STANDS AT ONLY 3 PERCENT WITH 1 PERCENT UNDEREMPLOYMENT,

IN EFFECT THE WORKFORCE IS FULLY EMPLOYED. INFLATION IS RUNNING AT

3.3 PERCENT. DOMESTIC EXPORT PATE'S HAVE FALLEN BY 6 PERCENT

COMPARED WITH LAST YEAR BUT A STRONG RISE IN RE-EXPORTS, PARTICULARLY

TO CHINA HAS MAINTAINED HONG KONG'S PERFORMANCE IN INTERNATIONAL

TRADE. THE LINK WITH. THE U.S. DOLLAR HAS HELD WELL IN SPITE OF

THE GYRATIONS OF THE FOREIGN EXCHANGE MARKET EARLY THIS YEAR.

3. THE PROCESS OF EXTENDING THE ELECTED MEMBERS OF THE DISTRICT

BOARDS, OF CREATING A NEW REGIONAL COUNCIL AND OF INSTALLING A

PARTLY ELECTED CENTRAL LEGISLATURE (LEGCO) HAVE ALL, WITH A FEW SHORT HICCUPS (AS OVER THE POWERS AND PRIVILEGES BILL), GONE VERY

SMOOTHLY. THE RESULTING COMPOSITION OF THE LEGISLATIVE COUNCIL

IS NOT ALL THAT DIFFERENT FROM THAT PRODUCED BY THE APPOINTED

SYSTEM. AND BECAUSE OF THIS HAS GAINED SUPPORT FOR THE INDIRECT

ELECTIVE SYSTEM.

4. ALL THESE FACTORS HAVE COMBINED TO CREATE SOCIAL STABILITY AND

AN ABSENCE OF IMMEDIATE TENSION IN THE COMMUNITY.

5. UNDERNEATH THIS PICTURE OF STABILITY LIE THE CONSTANT FACTORS OF VOLATILITY AND VULNERABILITY. THE VULNERABILITY IS TO EXTERNAL

TRADE FACTOPS. AS A COMMUNITY WITHOUT RESOURCES HONG KONG LIVES BY

MANUFACTURING AND TRADE. ANY LIMITATIONS ON ACCESS TO OVERSEAS

MARKETS THREATENS HONG KONG'S ECONOMY. A STRONG ECONOMY IS ESSENTIAL

TO SOCIAL STABILITY. THENCE THE DEEP AND INSISTENT PUBLIC CONCERN EXPRESSED ABOUT PROTECTIONISH IN THE UNITED STATES. THE EXISTENCE

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