PESTRICTED
4
China's total imports from Hong Kong. To a considerable extent, such imports help to improve China's export capability, by supplying raw materials of a higher quality and by upgrading the productive capacity of some of its factories.
Table 4 & Figure 4
10.
Putting these imports and exports figures into perspective, China has always run a visible trade surplus with Hong Kong. Except in 1984 and 1985 when the growth in China's imports far outpaced that of its exports, this trade surplus has been fairly stable at around US$4 billion each year.
In the first half of 1987, China's trade
surplus with Hong Kong (and Macau) stood at US$2.34 billion, compared with a surplus of US$1.84 billion in the same period in 1986. Against the background of China's overall trade deficit since 1984, its trade surplus with Hong Kong has helped to offset its trade deficits with other economies (Table 4 and Figure 4). In these circumstances, the relative importance of Hong Kong to China in terms of foreign exchange earnings will have increased.
Table 2
11.
Besides direct trade, Hong Kong also plays an important role as an entrepôt for China. Given its broad range of international business contacts and supporting business services, Hong Kong has been of considerable help to China in developing its overseas markets. The modern infrastructural facilities available in Hong Kong have also enabled China to overcome problems associated with the transportation of its exports. Reflecting the growing importance of Hong Kong as an entrepôt for China, Hong Kong's re-exports of China origin grew by 49% in 1986, and by a further 72% in the first half of 1987 over the same period a year ago. There has also been a considerable increase in the transhipment through Hong Kong of goods entering or leaving China over the past few years. These developments have enhanced further Hong Kong's role in enabling China to earn additional foreign exchange.
12.
As regards China's invisible earnings, Hong Kong's contribution, while likely to be substantial, is not easy to quantify. There are, nevertheless, some useful indications in the area of tourism. According to China's figures, trips made by "compatriots" in Hong Kong, Macau and Taiwan accounted for over 90% of all trips made by visitors to China (Table 2). Of these, trips made by Hong Kong residents are believed to have accounted for the overwhelming majority. Incomplete statistics collected in Hong Kong show that expenditure by Hong Kong residents in China rose at an average annual rate of 15% in US dollar terms between 1981 and 1986. In 1986, such spending probably amounted to around US$800 million.