CONFIDENTIAL # 3
10
19.
Reflecting China's increased controls over its foreign exchange spending, Hong Kong's domestic exports and re-exports to China recorded sharp declines in the first quarter of 1986. The value of domestic exports to China, at HK$3,136 million, was 20% lower than in the same quarter last year while that of re-exports to China, at HK$7,964 million, was 33% lower. It should, however, be noted that these comparisons are made with the first quarter of 1985, which was an exceptionally buoyant quarter, in which corresponding growth rates of 97% and 149% were recorded. Despite the recent declines, the value of Hong Kong's domestic exports to China in the first quarter of 1986 was still 58% higher than in the first quarter of 1984, and that of re-exports was 68% higher. Figures for April 1986 suggested that the declining trend for domestic exports to China has stabilised but that for re-exports to China continued.
20.
Analysed by products, domestic exports to China of electrical machinery, telecommunications, sound recording and reproducing apparatus, and photographic supplies, optical goods and watches and clocks were, in money terms, 51%, 47% and 2% respectively lower in the first quarter of 1986 than in the same quarter last year. Domestic exports of textile yarn and fabrics, tobacco, and miscellaneous manufactured articles, on the other hand, rose by 39%, 20% and 2% respectively. Over this period, re-exports of telecommunications, sound recording and reproducing apparatus, electrical machinery, and general industrial machinery and equipment fell by 69%, 66% and 13% respectively. Re-exports of machinery specialized for particular industries, textile yarn and fabrics, and iron and steel, however, rose by 10%, 7% and 4% respectively, all in money terms.