G.F. 326
CONFIDENTIAL #3
28
63.
Besides providing China with infrastructural
services such as transport and communications, Hong Kong is also supplying China with a wide range of financial,
professional, technical and advisory services. Over time
China will attempt to develop such services domestically.
However, in view of the enormous shortfall at present in
China's ability to supply such services and the limited
specialised training resources available, Hong Kong's role
in these areas is likely to remain prominent even in the
longer term. Bi- and trilingualism in the Hong Kong community is a distinct advantage in this respect, as it
helps to eliminate communication problems between
businessmen in China and those from elsewhere.
(e) Hong Kong as an investor in China
64.
In the longer term, Hong Kong's investment in
China is likely to increase in absolute terms, but may
decline in relative importance as China becomes more
successful in attracting investment from other sources. Recently it was reported that China will shortly introduce a number of reform measures to improve business conditions
for foreign investors. However, radical changes are not
expected, as China will remain very cautious in the
fundamental areas of foreign exchange control and wage
policy, which pose the greatest difficulty to foreign
investors. The longer term worry about the possible
diversion of investment to China at the expense of Hong
Kong is probably more apparent than real. The amount of
funds available for investment in Hong Kong has, in recent
years, exceeded what can be absorbed by the investment
opportunities available locally, although the range of
viable opportunities may itself be limited by the opening
up of alternative opportunities in China. Despite a
CONFIDENTIAL # 3