C.F. 326
CONFIDENTIAL #3
14
31.
In view of China's recent import restrictions,
it is likely that the growth rates of Hong Kong's domestic exports and re-exports to China will slow down further in the second half of 1985. Nevertheless, barring any
further tightening of import regulations by China, the
growth rates in real terms for domestic exports and re-exports to China forecast in the budget at the beginning of this year can probably still be achieved. The budget forecast for the growth rate of domestic exports to China in 1985 was 50% in money terms or 40% in real terms, and for re-exports to China 80% in value terms. However, as the rates of increase in prices for both domestic exports and re-exports have been slower than expected, the growth rates in money terms of domestic exports and of re-exports would probably have to be revised downwards to 44% and 72% respectively. Thus
domestic exports and re-exports to China are now expected
to reach HK$16.2 billion and HK$48.3 billion respectively
in 1985.
32.
Comparatively speaking, re-exports should be
less affected by these import restrictions than domestic exports because of the greater importance in the former of items of machinery and equipment which are export-generating or are considered vital to the modernisation programmes. On the other hand, a
substantial proportion of Hong Kong's domestic exports to
China is represented by consumer goods which are the target of the recent restrictions. For example, the tariff rate on colour TVS is 90-100%, with an additional regulatory tax of 40% on top of the tariff; the tariff rate on photocopying and thermocopying apparatus is 70%, with an additional regulatory tax of 80% on top of the
tariff; and the tariff rates on gramophones and
record-players, radio-receivers, and ordinary photographic
apparatus are 130%, 130% and 80% respectively.
CONFIDENTIAL # 3