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in real terms in 1988.
This growth is expected to be more balanced
between external trade and domestic demand than in 1987. The rate
of inflation is expected to average around 7% for 1988 as a whole.
HONG KONG-CHINA ECONOMIC RELATIONS
5. Since China's adoption of the "Open Door" policy in 1979, Hong
Kong's economic relations with China generally, and Guangdong
province in particular, have undergone rapid growth and development.
6.
Since 1985, China has been Hong Kong's largest trading partner.
It is now the second largest market for Hong Kong's domestic
exports, the largest market for Hong Kong's re-exports and the
largest source for Hong Kong's imports. Reciprocally, Hong Kong has
recently overtaken Japan to become China's largest trading partner,
accounting for more than a quarter of China's external trade.
7.
Hong Kong is also the most important source of foreign
investment in China, both in terms of the total number of projects
entered into (75%) and the total contract value committed (up to
70%). In recent years, China-interest companies have also made very substantial investments in Hong Kong.
8. Other important areas, for example, invisible trade (including tourism) and financial links have also been developing rapidly in
recent years.
9.
Of all the provinces in China, Hong Kong has its closest economic relations with Guangdong. Guangdong is now China's top exporting province. Hong Kong is its largest export market,
accounting for nearly 70% of the province's total exports. Hong Kong is also the most important source of foreign investment in
Guangdong (60-80%).
10. Virtually all outward processing activities in Guangdong are related to Hong Kong. Considerable labour resources in Guangdong (over 1 million workers) are used in production which earns foreign exchange for China, while the productive capacity of the manufacturing sector in Hong Kong is correspondingly increased.
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