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15. In 1966 the main items in Hong Kong's external receipts (disregarding re-exports, exports to China and the invisible transactions with the United Kingdom referred to in paragraph 6 above) were approximately:-
Exports (Hong Kong figures)
Tourism
Capital inflow
£357 million
£70 million
£15-20 million
It can reasonably be assumed that tourism earnings would virtually cease and that the long-term capital inflow would stop efter incorporation
into China.
16. How far would Hong Kong as part of China continue to export and
There would be no thus add to China's foreign exchange receipts?
such exports to the United Kingdom (see paragraph 13 above) and exports to the USA, which does not trade with China would cease: together these account (1966 figures) for 53 per cent of all Hong Kong exports,
No doubt some reducing potential earnings to £165-170 million.
part of these would be lost because Hong Kong's other trading partners might not be so willing to admit her goods when she became part of China. While eventually China would seek and probably find new markets for some part of the Hong Kong export trade lost, it seems clear that the net initial effect of incorporation of Hong Kong would be a reduction in China's capacity to import.
It is difficult
to put a figure to this reduction but provided that any reduction in China's imports did not fall disproportionately on the United Kingdom, the loss of United Kingdom export earnings seems unlikely (on any conceivable assumption about China's loss of earnings) to exceed €10 million. (In addition the reserves might suffer marginally because of a run-down of China's small sterling holdings in order to help maintain imports.)
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