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remain a possibility.
Through these activities, the
financial links between Hong Kong and China could be
further strengthened.
Investment
32.
(a) Hong Kong's investment in China
The euphoria over setting up business in China
with a view to exploiting China's domestic market seems to
have faded. China's recent measures to boost foreign
investment seem unlikely to change this situation, as the
preferential treatment is granted mainly to high
technology projects and export-oriented enterprises. Only
a few projects involving Hong Kong interests belong to the first category. Nevertheless, some export-oriented
factories in Hong Kong seeking to relocate to China to
take advantage of the lower land and labour costs would
probably regard the new measures as an additional incentive, and there are signs that more factories
involving Hong Kong interests are being set up in China so as to reduce production costs.
33.
(b) China's investment in Hong Kong
Enterprises involving Chinese interests have
continued to expand and diversify their business in Hong
Kong. In the financial sector, the Bank of Communications
is planning the introduction of a capital market fund. This fund would invest mainly in medium- and long-term bonds and commercial paper. The Bank of Communications
has also expanded in other lines of business. For
example, its five-year fixed-rate mortgage loans for residential flats, which appears to have been
well-received, has now been extended to industrial
buildings.
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