Financial links between China and Hong Kong
Introduction.
The economic ties between Hong Kong and China,
helped by the cultural, ethnic and geographical links between the two places, have been traditionally strong. The launching of the modernizations programme by China in
the late 1970's has further enhanced these ties.
2.
Over the past decade, Hong Kong has developed
into a major financial centre in the Asian Pacific Region supported by a well-established network of transportation
and communication facilities. As a result, Hong Kong
possesses the necessary conditions for becoming a major
financial link between China and the rest of the world.
This has become all the more important as China's determination to modernize through opening its economy to the rest of the world ushers the country into a new era of economic development and changes its policy stance towards international finance.
3.
A
In the early 1950's, China borrowed
substantially from the Soviet Union to finance its
intervention in the Korean War and its First Five-Year
Plan. But, with the Sino-Soviet rift, China repaid its debt to the Soviet Union ahead of schedule despite the difficulties caused by the Great Leap Forward (1958-60), natural disasters (1959-61) and the cessation of Soviet
aid in 1960. Subsequently, China's financial policy switched to one that adhered strictly to the principle of "self-reliance" in the 1960's, and in particular during the Cultural Revolution.
However, with the improvement in
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