Background Paper No 3
SECRETARY OF STATE'S VISIT TO HONG KONG, 26-30 JANUARY
BACKGROUND PAPER: HONG KONG'S TRADE WITH OTHER COUNTRIES
General
1 Hong Kong depends almost entirely on imports for the supply of raw materials, fuels and foodstuffs for domestic consumption and for the manufacture of exports. The importance of exports to Hong Kong is illustrated by the fact that the territory (with a population of 5 million) is the world's largest exporter of clothing, toys and watches (by volume). Clothing
and textiles alone account for nearly half of its total exports. In view
of this dependence and the virtually free access to its own market, Hong-
Kong is extremely sensitive to trade restrictions and the spread of protectionis:
2
The recent high level of economic growth which led to a surge of imports has been accompanied by a worsening of the overall visible trade gap, from HK$1.7 billion (about £160 million) in 1976 to HK$9.1 billion (about £900 million) - despite an annual increase in exports of 22%.
3
The main features of Hong Kong's visible external trade are:
I A large deficit of almost £1000 million per year with China, indicating its dependence on China for supplied of essential commodities, especially foodstuffs. The net balance of invisible trade between the two is also believed to be substantially in China's favour. A separate paper on Hồng Kong China trade has been prepared (paper No 2)
ii An even bigger imbalance on trade with Japan (of about £1 000
million a year) where the ratio is more than seven to one against Hong Kong. Japanese imports have more than doubled since 1974 and currently account for 25% of all Hong Kong imports. Hong Kong is making a big effort to reduce the deficit both by increasing its exports and looking for alternative sources of supply for materials
such as plastics.