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18. An analysis of the Hong Kong Government's performance
since the war and of its future plans for economic, social
and political development as viewed from the FCO is given in Annex C. This section of the paper attempts on this basis to outline the prospects for further development over the next decade. The Hong Kong administration have made significant progress and have successfully overcome major obstacles eg the massive inflow of refugees from China. The proposals for further progress mentioned in Annex C are not new and many of them have in the past been rejected by the colonial Government in the light of their appreciation of local conditions. But in the discharge of our constitutional responsibilities for the welfare of the inhabitants of Hong Kong, there does seem to be much scope for eg fiscal reform; the acceleration of existing social programmes; legislation to ameliorate working conditions; and the introduction of social security provisions at least up to the best that are provided by Hong Kong's Asian neighbours. It is common ground between Whitehall and the Colonial Government that social progress must continue; and it is appropriate to try to establish a detailed programme showing what progress can be made over the next decade bearing in mind the pressures on both sides. Annex C is, therefore, a first step in this process.
19. Our overall conclusion is that, if the present momentum of economic growth is to be maintained with the necessary underpinning of public expenditure to make Hong Kong an acceptable urban and industrial environment the Colonial Government will require the active and evident support of senior members of the Administration and of the Unofficial
members of the Executive and Legislative Councils. There seems little practical possibility of employing HMG's constitutional powers (see paragraph 4 above) to impose solutions from Whitehall; or of the Governor imposing solutions without the consent of the Councils. Either could lead to a constitutional confrontation in Hong Kong which could impede the implementation of the desired reforms. Equally, however, Parliament here will need to be convinced that the Councils, when tendering advice
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