G.F. 326
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their Hong Kong based manufacturing operations more competitive (by investing in productivity growth, quality improvement and product innovation measures, as opposed to substantial acquisition of new industrial machinery).
The need for the Government to double its efforts in
encouraging the manufacturing sector to upgrade its output
was therefore self-evident.
13.
14.
15.
16.
DS(ES) 2 noted that it used to be said that Chinese workers
were unskilled and had low productivity. This was gradually improving under Hong Kong guidance, and outward processing in the Pearl River delta was doing well. There would be increasing competition for Hong Kong unless the
workforce moved ahead. STI said that in the mid-1970s he
believed Hong Kong to be 15-20 years ahead of China. The gap had now narrowed to 5-7 years.
SDA remarked that, as exports to China increased, China's foreign exchange earnings decreased. DS(ES)2 pointed out that Hong Kong was gradually taking over as a source of goods for China, replacing Japan to some extent, although many goods were sourced elsewhere (i.e. were reexported
from Hong Kong).
STI believed more American and Japanese companies were
establishing offices in Hong Kong and factories in China. They could begin operations here while making arrangements to work in China, and could shift there when manufacturing in Hong Kong became uncompetitive.
S for T enquired whether tertiary educational institutes in Hong Kong were contributing to Chinese development. STI said there was little technological transfer. Hong
Kong's universities were effectively "teaching factories"
which had little contact with the manufacturing sector.
Within China, most educational institutes also had few
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