Translation
FAZ, 6.11.1984
China's new course has an effect on Hong Kong too
Readiness to invest in the colony is increasing
Peter Odrich reports
HONG KONG, 5th November
Peking's latest decision to steer the People's Republic of China towards a market economy has found an extremely positive echo in Hong Kong. Since the British-Chinese agreements on the political future of Hong Kong were published, nothing from China has had such a favourable effect in Hong Kong as the announcement of the change of course in economic policy. Signs of this became evident a few weeks ago. One of Peking's accompanying documents on the British-Chinese agreements expressly stated that "neither a socialist system nor a socialist policy will be introduced" in Hong Kong after sovereignty is returned to China. Instead, "the present capitalist economic system will be continued unchanged." This formulation surpassed all expectations in Hong Kong by far.
The Hong Kong and Shanghai Banking Corporation, which in many respects fulfills the role of a central bank in Hong Kong, confirms that after some initial reservations, the small and very small businesses in Hong Kong are now beginning to regain confidence in the colony's future. Hong Kong has always been noted for the hoarding of foreign currency, particularly by members of the lower social classes. According to the Hong Kong and Shanghai Bank, people with small foreign exchange holdings have now started to change them back into Hong Kong dollars, although the current market rate of interest in Hong Kong certainly offers no incentive for such exchange transactions. Essentially, however, these funds now seem to be earmarked for investments. The fact that investments - at least if one disregards the construction industry - are beginning to pick up in Hong Kong is also demonstrated by the colonial government's latest revision of economic estimates. Only a few months ago it was assumed that investments (excluding construction) would increase this year by about 8%. The projected growth figures have now been more than doubled by the government from 8% to 17%. In addition, several builders have suggested that even the hitherto totally disorganised construction market will pick up in the foreseeable future. In support of this claim, it has been pointed out that there have already been a number of lease agreements based on above-average rents.
The British-Chinese agreement has had a particularly positive effect on the construction market. There are several reasons for this. Firstly, Peking will recognize all lease agreements concluded by the British until 2047. Secondly, after sovereignty has been returned to the People's Republic these lease agreements will in many cases be treated much more favourably from a fiscal point of view than at present. Thirdly, Peking will even recognize certain real estate arrangements which date back to the time before Hong Kong was a British colony.
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