CONFIDENTIAL
FM HONG KONG
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OF 250745Z MARCH 91
CONFIDENTIAL
INFO PRIORITY PEKING, WASHINGTON
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YOUR TELEGRAM NO. 562: CHINA/US RELATIONS: MFN STATUS.
1. OUR UPDATED ASSESSMENT OF THE ECONOMIC IMPACT ON HONG KONG OF CHINA'S LOSS OF US MFN STATUS IS THAT THERE WOULD BE -
(A) A REDUCTION BY 33 TO 44 PER CENT, OR OF HKD 27 TO 36 BILLION (USD 3.5 TO 4.6 BILLION) WORTH, OF HONG KONG'S RE-EXPORTS FROM CHINA TO THE UNITED STATES:
(B) TOGETHER WITH OTHER RELATED TRADE FLOWS, A REDUCTION BY 5 TO 7 PER CENT, OR OF HKD 69 TO 91 BILLION (USD 9 TO 12 BILLION) WORTH, OF HONG KONG'S OVERALL TRADE:
(C) A LOSS IN HONG KONG OF AROUND HKD 7 TO 10 BILLION (USD 0.9 TO 1.2 BILLION) IN INCOME AND OF 32,000 TO 43,000 JOBS AS A DIRECT IMPACT:
(D) A LIKELY CURTAILMENT OF THE GDP GROWTH RATE BY 1.3 TO 1.8 PERCENTAGE POINTS, OR BY ONE QUARTER TO ONE THIRD OF ITS TREND VALUE (5.5 PER CENT IN REAL TERMS PER ANNUM), IN THE YEAR OF INCIDENCE:
(E) A FURTHER LOSS IN INCOME AND JOBS IF CHINA CUTS BACK ON ITS IMPORTS AS A RESULT:
(F) SIGNIFICANT ADVERSE EFFECTS ON MANUFACTURING INVESTMENT VENTURES AND OTHER PRODUCTION ARRANGEMENTS BY HONG KONG AND FOREIGN COMPANIES IN CHINA: AND
(G) THE LIKELIHOOD OF HONG KONG'S ROLE AS THE GATEWAY TO CHINA BEING UNDERMINED CONSIDERABLY, THUS AFFECTING LONGER-TERM GROWTH POTENTIAL AND BUSINESS CONFIDENCE IN HONG KONG.
2. A MORE DETAILED ANALYSIS OF THE ECONOMIC IMPACT, PRODUCED BY
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