DRAFT
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ANNEX E
DSR 11C
UNITED KINGDOM/HONG KONG ECONOMIC RELATIONS
1.
Up-to-date figures are lacking in some areas, parti-
cularly invisibles. From the data available, the pros and
cons appear to be about even. The UK runs an overall
current account deficit with Hong Kong, but the amounts
involved are not substantial. UK investment in Hong Kong
is relatively small and is partly offset by return invest-
ment in the UK. The value of Hong Kong as an entry point
for the Chinese market is at present small, but it is
likely to increase. Another growth sector is UK export
credits to Hong Kong: while not large in real terms, it is
accepted m'the
the largest single slice of total ECGD business at risk.
national untered.
VISIBLE TRADE
2. Hong Kong is the UK's second largest trading partner in
Asia, after Japan, the volume is however not great, compri-
sing between 1% and 2% of total UK trade. The UK takes
about 8% of Hong Kong's exports and provides some 5% of the
territory's imports. The UK maintains a fairly large
deficit with Hong Kong in visible trade: in 1980 the UK
exported £559 million worth of goods to Hong Kong and
imported £850 million worth from Hong Kong, leaving a deficit
of £291 million. Despite increases in British exports, the
gap has widened in the last five years.
INVISIBLES
3. UK earnings on invisibles close the trade gap to some
extent. The last available figures are for 1977 and are
based partly upon estimates. There was a private sector
surplus on invisibles that year of £156 million and a
deficit on official transactions of £55 million, leaving a
balance of £101 million. The UK trade deficit with Hong
Kong for 1977 was £134 million so there was a current account
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