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11.
The Governor said that his strong instinct was that the most important thing was to ensure that Hong Kong's growth rate remained strong, so that we generated
The the resources to enable living standards to improve. strength of our economy was the best guarantee for Hong Kong's political pluralism. Moreover, there was a danger that Government over-spending could depress growth. needed some financial guidelines. Low tax and controls on public spending were important for Hong Kong's economic strength. But it was also important to look at spending priorities in the light of advice from members of ExCo and LegCo. Mr. Luk Shin-tim said that he did not disagree with this principle. But the guidelines needed to be debated. A prosperous community should be able to afford good social services. The Governor said that we had to be cautious and restrained because of our political position. It was dangerous to take too many risks. And the strength of our economy made it easier to deal with political problems.
12.
The Governor said that in his view the argument for retaining the link between the Hong Kong and US dollars was over-whelming. It would be very unwise to allow the exchange rate to reflect political uncertainty. Mr. Antony Cheung agreed.
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SCA
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To
(R.J.F. Hoare)
PS/GH 24.7.92
Mr. Dinham
Mr. Llewellyn
Mr. Ricketts, HKD
CONFIDENTIAL
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