UK EYES A
China
export trade has diversified in recent years so her dependence on Hong Kong
for the production of foreign exchange has declined. Table I calculations are based
on a net figure for "invisible" earnings; if $600-700 million is assumed then, in
1976, the total foreign exchange proportion earned from Hong Kong rises to 35-37%.
Hong Kong's contribution is therefore roughly one third of China's annual foreign
exchange earnings. The importance of Hong Kong is perhaps more clearly demonstrated
by Table II which shows how the earnings from Hong Kong go towards covering the
usual deficit China has in its trade with the major non-communist industrial
countries. In 3 of the last 5 years the net. Hong Kong earning ha
out or amply covered this industrial trade.
TABLE II
cancelled
THIS IS A COPY
THE ORIGINAL HAS BEEN RETAINED IN THE DEPARTMENT UNDER
BENEFIT TO CHINA OF HONG KONG'S FOREIGN EXCHANCE EARNINECTION 3 (4) OF THE
PUBLIC RECORDS ACT 1958
(US$ billion)
1972
1973
1974
1975
1976
China's trade deficit with
major industrial non-
0.6
1.5
2.6
2.6
1.3
communist countries
Foreign exchange earnings
from Hong Kong (net)
1.2
1.5
1.8
1.8
1.9
TRADE
1977
15%
5. Trends. The value of Chinese exports to Hong Kong has grown at an average of about
annually since 1962 although growth has not been steady and indeed fell during the
Cultural Revolution, In the past few years the export growth pattern (in US dollars)
has been distorted by the world-wide price inflation and the appreciation of the
Hong Kong dollar against the US dollar. Hence between 1972 and 1976 Chinese exports
increased by 131% in value but only 33% in volume as measured by the export quantum
Furthermore the increase was erratic with volume falling in 1974 due to the
effects of the 1974-75 recession in Hong Kong. China's increasing use of the
entrepot function of Hong Kong is also evident from Table III; re-exports as a
index.
proportion of total Chinese exports reached their highest proportion ever (28%) in 1976
and 1977. This growth in Chinese re-exports in 1976 reflects the dramatic expansion by
3
UK EYES A