CONFIDENTIAL
FM BTC HONG KONG
TO DESKBY 10150OZ F C O
TELNO 295
OF 100755Z SEPTEMBER 90
724
CONFIDENTIAL
RECO"
TMKB 226/34
SEP 1990
41
173570 MDHIAN 7991
TOP COPY Q DIST?
GI
YOUR TELNO 1628: LORD CAITHNESS'S VISIT TO HONG KONG 15-20 SEPT
1990: BRIEFING
THE HONG KONG ECONOMY AND BRITISH BUSINESS PROSPECTS
1.
ALTHOUGH THE HONG KONG ECONOMY REMAINS STRONG, THE PAST YEAR HAS NOT BEEN ONE OF THE COLONY'S BEST. THE UPHEAVALS IN CHINA IN JUNE 1989 CAST A LONG SHADOW. EXPORTS AND RE-EXPORTS TO CHINA SLOWED. SO DID TOURIST ARRIVALS. THE SLUGGISH ECONOMIES OF EUROPE, NORTH AMERICA AND EVEN JAPAN HAVE LED TO A SLACKENING OF DEMAND FOR HONG KONG'S EXPORTS. INFLATION HAS REMAINED STUBBORNLY AT AROUND 9 PER CENT, AND ALTHOUGH THE GULF CRISIS WILL HAVE LESS DIRECT IMPACT ON HONG KONG THAN MOST PLACES, SINCE THE POWER STATIONS ARE COAL FIRED AND ROAD TRANSPORT COSTS ARE NOT SIGNIFICANT BECAUSE OF SHORT DISTANCES, NEVERTHELESS EVENTS IN THE MIDDLE EAST MAY FURTHER REDUCE WORLD DEMAND FOR HONG KONG'S EXPORTS, WHICH ARE LARGELY OF CONSUMER GOODS, AND FOR HER FINANCIAL SERVICES. IT IS HOWEVER AN ECONOMY WITH A LOT OF STAYING POWER, FLEXIBILITY AND RESILIENCE. FORTUNES CONTINUE TO BE MADE, THE SKYLINE CONTINUES TO CHANGE AS NEW DEVELOPMENTS SURGE AHEAD, AND MOST FOREIGN BUSINESSES, INCLUDING MANY BRITISH, CONTINUE TO FIND IT IS A GOOD MARKET AND A GOOD CENTRE FOR
ACTIVITIES ELSEWHERE IN THE PACIFIC RIM REGION.
2.
UK EXPORTS AND INVESTMENTS
-
BRITAIN'S EXPORTS TO HONG KONG DURING THE DECADE OF THE 1980'S GREW ON AVERAGE BY OVER 10 PER CENT, THUS JUST SLIGHTLY BEATING OUR WORLD WIDE EXPORT INCREASE OF 9 PER CENT. OUR EXPORTS TO HONG KONG LAST YEAR WERE WORTH OVER POUNDS STR 1.1 BILLION. THE FIGURES FOR JANUARY JUNE THIS YEAR TOTAL POUNDS STR 583 MILLION, A 6 PER CENT INCREASE OVER THE SAME PERIOD IN 1989. HONG KONG IS OUR LARGEST MARKET IN ASIA AFTER JAPAN AND INDIA AND OUR 17TH LARGEST MARKET IN THE WORLD. OUR EARNINGS FROM INVISIBLES ARE PROBABLY WORTH ANOTHER POUNDS STR 1.2 BILLION. AREAS OF PARTICULAR IMPORTANCE TO THE UK ARE POWER GENERATION (SUPPLYING PLANT FOR BOTH ELECTRICITY GENERATING COMPANIES AND THE GAS COMPANY) AND TRANSPORT (BUSES AND RAILWAY ROLLING STOCK AND SALES
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