ENG-1971 — Page 35

12

REVIEW

Growth of activity in the public economic sector has also been impressive. In the financial year 1960-1 government expenditure amounted to $845 million. By 1970-1 this had risen to $2,452 million, which makes an average annual increase of 11.3 per cent. Revenue from Salaries, Profits and Interest Taxes increased in the same period by 424 per cent and this with only one minor increase in tax which, remaining at the 15 per cent standard rate, is still very low by most world standards and a rewarding incentive to both hard work and new investment.

The principal factor accounting for all this economic progress over the decade is easy to identify. It has been a remarkably high and continuing rate of expansion of external trade. In 1971 Hong Kong's domestic exports amounted to $13,750 million, having increased over the period by about 17 per cent annually, a rate of increase matched by very few developing countries. By 1970, Hong Kong was already counted among the top 10 trading countries of the world in terms of value of exports per head of population, and (which some might think even more remarkable when there are 85 recognisable countries in the world with larger populations) eighteenth in absolute terms. Whilst, as in the past, textiles and clothing are still the major export earners, the trend to diversification of manufactures, first apparent in the late 1950's, has continued at an encouraging rate and Hong Kong has now become a major supplier of such varied visible items as transistor radios, toys, wigs, electric fittings, footwear, stain- less steel flatware and highly sophisticated electronic components.

Throughout recent years, however, the possibility of protectionist action in overseas markets has been an ever present threat to Hong Kong's export performance. This threat has not materialised to any significant extent outside the world of textiles, largely because of the rules for non-discrimination and fair trading practice embodied in the General Agreement on Tariffs and Trade (GATT), which are applied to Hong Kong by virtue of United Kingdom membership. The Hong Kong Government, through the Commerce and Industry Department and its offices overseas, has also maintained constant vigilance in defending Hong Kong's trading rights. In the case of textiles, however, the acceptance in 1962 by the world trading com- munity of the Long Term Arrangement regarding International Trade in Cotton Textiles ("LTA') led to a rash of negotiations for the restraint of Hong Kong's exports of cotton textiles to its major markets in North America and Western Europe. A world which had learnt gratefully to stay cool in inexpensive cotton clothing, now began to tolerate some marginal itching and perspiration for the