TNAG-1744-FCO40-2463-Visits-by-FCO-officials-to-Hong-Kong--including-visit-by-Lor-1988 — Page 36

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MDLIAN 7762

HAVE BEEN SUBSTANTIAL. INFLATION, AS MEASURED BY THE CONSUMER PRICE INDEX HAS BEEN INCREASING STEADILY: JANUARY 6.3 PER CENT, FEBRUARY Y.9 PER CENT, MARCH 7.1 PER CENT, APRIL 7.4 PER CENT. THE PROPERTY MARKET IS ACTIVE: PRICES IN SOME SECTORS HAVE EXCEEDED

THE LEVELS REACHED PRIOR TO THE STOCK MARKET CRASH OF OCTOBER 1987. CAPITAL INVESTMENT IS STILL GROWING, ALTHOUGH IT HAS SLOWED SOMEWHAT SINCE THE THIRD QUARTER OF LAST YEAR. GROWTH IN EXPORTS

HAS ALSO SLOWED BUT IS STILL SUBSTANTIAL. IN APRIL DOMESTIC

EXPORTS INCREASED BY 10 PER CENT, AND RE-EXPORTS BY 45 PER CENT, OVER THE SAME MONTH IN 1987. IN MARCH AND APRIL THE GROWTH RATES

OF DOMESTIC EXPORTS TO THE UNITED STATES, FEDERAL REPUBLIC OF GERMANY AND JAPAN SLOWED SIGNIFICANTLY BUT THOSE TO THE UK

AND PARTICULARY TO CHINA REMAINED RELATIVELY HIGH. THE RE-EXPORT

TRADE WITH CHINA CONTINUED TO CONTRIBUTE TO HONG KONG'S RAPID

OVERALL GROWTH IN RE-EXPORTS.

5. HONG KONG RETAINS ITS AIR OF FRENETIC ACTIVITY. INFRASTRUCTURAL

AND DEVELOPMENT PROJECTS PROCEED APACE AND CONTRIBUTE TO A

BETTER QUALITY OF LIFE. FOREIGN INVESTORS, AND RETURNING

EMIGRANTS, CONTINUE TO BELIEVE THAT THERE IS MONEY TO BE MADE. THE MAIN PROBLEM IS STILL A SHORTAGE OF LABOUR, PARTICULARLY IN THE CONSTRUCTION INDUSTRY.

THE BASIC LAW

6. THE DRAFT BASIC LAW, PUBLISHED ON 28 APRIL CONTINUES TO ATTRACT A GOOD DEAL OF MEDIA COVERAGE, MUCH OF IT CRITICAL. REPORTING ON THE PERCEIVED SHORTCOMINGS OF THE DRAFT HAS INCREASED. THE MAN IN

THE STREET REMAINS APATHETIC ABOUT THE DRAFT OR FINDS IT TOO COMPLICATED TO STUDY. MOST HAVE NOT READ IT BUT ARE SCEPTICAL ABOUT

CHINESE INTENTIONS. IT WILL TAKE TIME BEFORE OPINION BEGINS TO

COALESCE ON A FEW KEY ISSUES. EVEN THEN INTEREST IS LIKELY TO BE LIMITED LARGELY TO THE EDUCATED MIDDLE CLASS. DURING THIS

CONSULTATION EXERCISE MANY PEOPLE ARE BECOMING AWARE FOR THE FIRST

TIME OF THE PERCEIVED SHORTCOMINGS IN THE BASIC LAW. THEIR

CONFIDENCE WILL BE BOOSTED IF THE CHINESE RESPOND SENSITIVELY TO

CRITICISMS OF THE DRAFT AND SHOW WILLINGNESS TO AMEND IT: IT WILL

BE DAMAGED IF THE CHINESE BEHAVE IN A HEAVY-HANDED WAY. THE

BEHAVIOUR OF THE VISITING MAINLAND BASIC LAW DRAFERS IS AN

ENCOURAGEMENT TO BELIEVE THAT THEY COULD DO THE FORMER.

REFUGEES AND IMMIGRANTS

7. A GREAT DEAL OF PUBLIC ATTENTION AND ANXIETY HAS BEEN FOCUSSED

ON THE MASSIVE INFLUX OF VIETNAMESE BOAT PEOPLE SINCE THE

BEGINNING OF 1988. THERE HAS BEEN GENERAL SUPPORT FOR THE NEW

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