G.F. 326
CONFIDENTIAL #
- 23
billion, of which 80% was from Hong Kong.
Most of the
funds from Hong Kong were invested in hotel projects, while some went into transport, energy and port development. In addition, Guangzhou earned processing fees totalling US$1 billion, with the great majority of
these outward processing activities being connected with
Hong Kong.
Part III: Likely developments in the longer term
52.
(a) Two political pre-conditions
As regards developments in Hong Kong-China
economic relations in the longer term, politics are likely
to be as important as economics. Two important political
pre-conditions have been assumed, one for China and the
other for Hong Kong.
53.
In the first place, it is assumed that China
will continue to implement its economic reforms and open
door policies with its economic decision-making process
more decentralized and its business operations more
market-oriented, though it will remain basically as a centrally planned economy. Some key features of a planned
economy, such as foreign exchange control, price control on strategic commodities and regulation of state
enterprises, are likely to remain even in the longer
term. These restrictions will, on the one hand, impose
significant constraints on China's economic development and on the development of Hong Kong-China economic relations. On the other hand, they may also present
continuing business opportunities to Hong Kong, with Hong
Kong capitalizing on the advantage of being
internationally oriented and not subject to these
restrictions.
CONFIDENTIAL #