POSSIBLE IMPACT ON HK IF CHINA LOSES MFN STATUS.
The debate on China's Most-Favoured-Nation (MFN) trading status was revived on 25 February 1992 when the U.S. Senate passed a bill attaching conditions on renewal of China's MFN Status. President Bush vetoed the bill on 2 March but the veto was overridden by the House of Representatives on 11 March. The Senate vote to override the veto is expected to take place soon.
2.
The President's veto could be overridden by two-thirds majorities in both the House and the Senate. It is widely believed that the presidential veto would be sustained in the Senate.
3.
The Hong Kong Government estimates that, if China's MFN status were withdrawn, Hong Kong would lose HK$91 billion to $123 billion in overall trade, HK$12 billion to $16 billion in income and around 44,000 to 60,000 in jobs.
4.
have
The removal of China's MFN status by the U.S. would a direct adverse impact on Hong Kong's re-exports of China origin to the U.S. A reduction by 35 per cent to 47 per cent, or of HK$36 billion to $49 billion worth of Hong Kong's re-exports from China to the U.S. is estimated. In 1991, re-exports of China origin to the U.S. amounted to HK$104 billion, representing 19 per cent of Hong Kong's total re-exports.
5.
In the longer term, removal of China's MFN trading status would have a significant effect on Hong Kong's manufacturing investment ventures in China. Hong Kong's role as a gateway to China would also be undermined.
Hong Kong Government Office 17 March 1992
[MFN]