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THE CONTRIBUTION OF HONG KONG TO THE BRITISH ECONOMY
The UK derives substantial benefits from the Hong Kong connection (as do a number of other countries) although it runs a deficit with Hong Kong on its purely visible trade. These benefits cannot, however, readily be quantified, bearing in mind the relative lack of economic statistics in Hong Kong and taking into account also that some benefits (for example, the advantages to the UK of the wide use of the English language in Hong Kong
and the historically close association of Hong Kong traders and financiers with the UK business community) are in any case rather
intangible.
2.
The UK's visible trade deficit with Hong Kong is currently running at around £150 million a year. In 1974 imports from Hong Kong were valued at nearly £300 million (the corresponding figure for the first 8 months of 1975 being nearly £200 million) and largely comprised manufactured articles, including clothing and textiles (accounting for 65%, by value, of Hong Kong's total domestic exports to the UK) and plastic toys and dolls (account- ing for 10%). There were also significant exports to the UK of footwear, transistorised radios and household utensils. Hong Kong has virtually no natural resources and is heavily dependent,
therefore, on external trade. It tends to export almost all its domestically produced goods (some 80-85%, by value) and special- ises in the production (mainly for Western oriented societies)
of those commodities in which it has a comparative advantage
over its overseas competitors. This, together with the almost
total absence of internally generated inflation in Hong Kong,
enables the UK to import top quality products at highly competi-
tive prices. In 1974, more than 30%, by value, of the UK's
imports of clothing had their origin in Hong Kong and the corre- sponding proportion for footwear was about 10%.
3.
Because Hong Kong must necessarily import nearly all its
raw materials and capital goods, as well as goods for internal
household consumption, and because its orientation to Western
/export
(118281) Dd. 391599 1,500M 2/69 Hw.
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