CRS-14
$2.7 billion. The United States is the major foreign direct investor in
Hong Kong's manufacturing sector with 47 percent of total investment, fol-
lowed by Japan with 30 percent. Out of Hong Kong's total two-way trade of
$44.5 billion in 1982, $8.6 billion of this was with the United States. The
United States absorbed 38 percent of Hong Kong's total domestic exports last
year, and as a supplier, the United States ranked third, after China and
Japan The American share of Hong Kong's import market was 11 percent last
year. U.S. businesses in Asia have long used Hong Kong as
a base of opera-
tions and a major transportation, communications and financial support center,
Hong Kong has loomed larger in U.S. considerations as American firms have
used the colony as a base in exploring the China market.
Americans interested in Beijing's future policy toward Taiwan have
also been following closely China's approach to Hong Kong for indications
as to how Beijing intends to deal with Taiwan. Thus far, Chinese spokesmen
have explicitly linked Beijing's approach on the two issues, though some
have added that while Beijing wants British administration to be replaced
by a "Chinese" one representing the "people" of Hong Kong, in the case of
Taiwan, the administration is already Chinese and, therefore, would not
have to be replaced.
If Beijing manages to reassert it sovereignty over Hong Kong without
disrupting the social and economic order there, it could add substantial
credibility to its claim that China's reunification with Taiwan would have
no negative effect on the way of life there and could thereby ease concerns
of some Americans about how U.S. interests in Taiwan would be affected by
reunification with the mainland. Of course, if Beijing is seen as mishandling