C ECONOMY
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HONG KONG ECONOMY
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Overall growth of the Hong Kong economy remained modest in 1990. GDP growth was 2.4% compared with 7.9% in 1988 and 2.3% in 1989. Performance picked up in the second half of the year despite the downturn in the US economy and the uncertainties created by developments in the Middle East. 3.5% GDP growth is predicted for 1991. Inflation is currently running at approximately 13%.
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D
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COCOM/EXPORT CONTROLS
HMG's present policy is that, as a British dependency, Hong Kong's controls should mirror those of the UK. This was not the case up to 2 years ago. However, the Hong Kong Trade Department have made strenuous efforts since then to implement the full range of UK controls, in particular those introduced for nonproliferation reasons. This is part of a strategy agreed with Hong Kong for raising the profile of its controls, including attending appropriate international meetings as part of the UK's team.
25 A critical issue for Hong Kong's economy is its continuing access to supplies of advanced technology up to, and post 1997. The events of June 1989 removed as a realistic possibility the prospect of the PRC ceasing to be classified by the West as a proscribed destination which had been the expectation previously. It has therefore been necessary to develop an alternative strategy for dealing with this issue. The policy paper prepared by DTI in conjunction with the FCO proposes that in the short term (1991-3) we should continue to strengthen HK's controls and raise their profile internationally. At the same time we should seek to secure Hong Kong's eligibility for the benefits of the simplified system of intra-COCOM trade agreed by COCOM partners. In practice this means persuading the US, FRG, Japan and France to add HK as an eligible destination to their General Licence for intra-COCOM trade.
26 In the medium term (1994-6) we should increasingly delegate responsibility and decision-making to Hong Kong for its export control system. It is clear that before 1997 there will be a need to discuss these issues with the PRC but it is too early to envisage the approach we should adopt and its timing.