CONFIDENTIAL
deficits, Hong Kong's Financial Secretary anticipates a return to balanced budgets in 1986.
4.
During the remainder of 1985, the Hong Kong economy should continue to benefit from the expected export growth in the economies of the leading industrial nations. The Government has forecast that real domestic export growth during 1985 will be lower in 1985 than in 1984 at 11%.
When this is combined with an estimated growth rate for re-exports of 30% the total growth forecast for exports in 1985 is 18%. However, this could be put at risk by the growing clamour for trade protectionist policies particularly from the United States (where the recent change in country of origin rules for textile and clothing imports has already introduced an additional element of uncertainty), the low levels of manufacturing investment during 1982 and 1983 and the rather tight labour market. The dependence on the United States economy as an export market is important. significant deterioriation in the fortunes of the American dollar would leave the Hong Kong Government with some difficult decisions to make concerning the future of the pegged rate system.
Any
HONG KONG/UNITED KINGDOM TRADE
5.
Hong Kong accounts for 1.2% of total UK exports. It is our 20th largest market worldwide and our 2nd largest in Far East after Japan. In 1983 our share of the market amounted to 4.2% when we
were Hong Kong's 6th largest supplier after China, Japan, USA, Taiwan and Singapore. Our market share is now about 4%. UK exports are mostly capital goods for project business (power generation equipment, transport equipment and electrical machinery); Project business apart, healthcare, information technology, construction services, offshore oil exploration, high quality consumer goods, have been identified as the sectors offering the best potential for future exports.
6. In a particularly agressive market, and in the face of soft loan elements in competitors' finacial packages United Kingdom companies are actively pursuing important project business contracts. The se
include the Tuen Mun Light Railway and the second harbour tunnel.
CONFIDENTIAL