CONFIDENTIAL
the largest source of goods re-exported through Hong Kong, China has become the largest market for Hong Kong's
31.
re-exports.
In the domestic sector, the property market showed clear signs
of revival, reflecting a re turn of confidence in Hong Kong following
the Joint Declaration and the fact that prices and rentals were at
more realistic levels. Over the period covered by this report there
was continued improvement in the take-up rate for all major types of
and yields from
were auction sales
finished
a
of
property,
Public
at
Crown land
satisfactory level.
sector expenditure on building and
construction was lower than
than in previous years, due to the completion a number of large capital works projects including the major part
of the Island Line of the Mass Transit Railway. Investment in plant
and machinery also showed signs of slowing down, following
substantial growth in 1984.
32.
stable.
unemployment and
In
the three
months
June
Despite the fall in domestic exports, underemployment figures remained to August, the unemployment rate was 3.3% and the underemployment
The labour force effectively
rate was 1.4%.
Continued expansion
related
services
opportunities.
was
of the entrepot trade and of the financial and
sectors
provided
Both earnings and private
showed moderate growth.
fully employed.
additional employment
consumption expenditure
inflation stayed low. By the end of the third
This was to had dropped about 3%.
33.
The
of rate
the annual quarter of 1985
rate
due in part to the stability of the Hong Kong dollar during its
second
were
under
under year
the linked exchange
rate
Occasions when the link with the US
held
well;
pressure,
the
sys tem
up
was
system. Although there
dollar at HK $7.80 came
in it
instrumental
stabilising the exchange rate and restoring confidence in the Hong Kong dollar. There are no plans to alter the link.
34.
Buoyant revenue
from
an
to
make steady
were
economy continuing progress and continued stringent control of public expenditure
expected
the 1985-86 financial
to a balanced re turn
Despite some
year
to
a
result in
for smaller deficit
The had been originally forecast.
than had budget in 1986-87 thus became a realistic expectation.
11
CONFIDEN TIAL