TNAG-1392-FCO40-1864-Future-of-Hong-Kong-briefing-for-meetings-and-visits-1985 — Page 126

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signs of improvement and the Hang Seng index (stock

although it has since fallen slightly

exchange), following

an increase in interest rates, recently

reached a four-year high having risen nearly 1000

points in the past year. Unemployment and inflation

figures remain low.

The Hong Kong dollar, which is

pegged to the US dollar, has remained stable against US equivalent despite relatively large

fluctuations in the US dollar against other major

currencies. After three years of budget deficits Hong

Kong's Financial Secretary anticipates a return to

balanced budgets in 1986.

its

18.

to

are expected

the US dollar we ak en

price

or so). Much

s ome of the

In the short term domestic exports remain weak (although should

domestic exports might regain

competitiveness lost over the past year

also depends on the demand in Hong Kong's major export

markets. Domestic export growth could be put at risk

by the growing clamour for trade protectionist

policies,

Despite the

expansion of trading links with China in 1984 (when

Hong Kong's exports to China grew by 60% in real terms), Hong Kong's economic dependence on the US

economy as an export market remains very important.

particularly from the USA.

Constitutional Development

19.

In November 1984 the Hong Kong Government published a White Paper containing proposals for the

further development of

representative Government in

the territory. Prior to publication the Government

had received a wide range of comments during two

months of public consultation. The White Paper was

approved by the Legislative Council (LEGCO) in January

this year.

Its main proposal is for 24 of LegCo's 56

members to be elected at three-yearly intervals (the

other 32 will continue to be appointed by the

Governor).

CONFIDENTIAL