CONFIDENTIAL & B
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compared with 1983. This was surprising in view of the growth in real income per head enjoyed in Hong Kong in that year.
The increase in food buying in China by Hong Kong residents and increased tourist expenditure in China generally may account for part but, in view of the volumes involved, only part - of these declines.
24.
Overall the SSEZ probably has not yet been very successful in respect of earning foreign exchange. Not until its manufacturing sector has increased in relative importance and the proportion of its output that is exported has risen substantially can it be expected that the SSEZ will become a significant foreign exchange earner.
Mediator between socialism and capitalism
25.
The SEZs are intended to be agents for mediating between socialism and capitalism. China's SEZs are expected to play a role in the introduction of foreign capital and technology and in the acquisition of foreign currencies, while at the same time easing the impact of these factors on the Chinese economy. Politics, not economics, have assigned the SEZs such a mediating role.
26.
It is difficult to assess how well the SSEZ has been fulfilling its role of being a mediator. Largely reflecting China's efforts to pursue the open door policy contacts with foreign traders and investors have intensified in the past few years. With the passage of time and as conditions for investment comparable to those in the SSEZ become available elsewhere in China, the political role of the SSEZ as a mediator in respect of foreign investment is likely to become somewhat less important than its function as a political and cultural buffer between Hong Kong and the rest of China.
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