which bears the most vulnerable to changes in Chinese economic policy. During periods influenced by more liberal economic policies, Chinese purchases have risen (from $63 million in 1970 to $296 million in 1974), but the autarkic policies of the "gang of four" led to cut-backs (for example, total Chinese purchases from Hong Kong fell to $157 million in 1976). With a more liberal economic approach once again predominating, the flow of goods to China has risen since 1976 to $295 million in 1978. An important contribution to higher figures over the next few years can be expected from Chinese purchases of electric power supplies. Under a draft agreement signed between China Light and Power and the Guangdong Electric Industry Bureau, China will pay an estimated $185 million for Hong Kong electric power over the three-year period of the agreement.
11. Perhaps the most important recent development in Chinese trade with Hong Kong is the extent to which the Colony is re-assuming its role as an entrepot for China. The value of Hong Kong's re-exports to China in 1978 was $214 million, a 22.4% increase over 1977, and accounted for 72.5% of all exports to China. Hong Kong's re-exports of imports originating from China rose to $3,659 million in 1978, a 46.9% increase over 1977, and accounted for 34.5% of all imports from China.
12. Many of the new economic links between Hong Kong and China involve forms of compensation trade and investment by Hong Kong firms in China. Since Hong Kong firms are under no obligation to report their external investment to the Hong Kong Government, it is difficult to establish the exact extent of their involvement in China. Claims by left-wing sources in Hong Kong that over 200 companies are already engaged in some form of cooperative venture in China, and 250 more involved in negotiations, are probably quite accurate, although many of the projects are small scale. Industries involved include garments, electronic components, toy parts, tools and tooling, metal components of various kinds and cement production.
COMTENNA TAT
/13.