XN000022-1985-03-20 — Page 5

+

WEDNESDAY, MARCH 20, 1985

THE AGREEMENT, AMONG OTHER THINGS, PROVIDED FOR THE MAINTENANCE OF HONG KONG'S EXISTING ECONOMIC, FINANCIAL, AND LEGAL SYSTEMS FOR 50 YEARS THAT IS THE RETENTION OF THOSE FEATURES OF THE PRESENT HONG KONG SET-UP WHICH HAVE HELPED IT TO BE SO SUCCESSFUL.

MR JOHNSON SAID HONG KONG'S DEVELOPING ECONOMIC RELATIONSHIP WITH CHINA WAS ALSO OF PARTICULAR INTEREST IN THIS CONTEXT.

+THE ECONOMIC RELATIONSHIP BETWEEN HONG KONG AND CHINA IS A LONG-STANDING ONE WHICH HAS BROUGHT SUBSTANTIAL BENEFITS TO BOTH SIDES,+ HE SAID.

+CHINA DERIVES SOMETHING LIKE ONE-THIRD OF ALL HER FOREIGN EXCHANGE EARNINGS EITHER FROM OR THROUGH HONG KONG AND IT IS NOW THE SECOND LARGEST MARKET FOR OUR DOMESTIC EXPORTS AFTER THE U.S. TAKING US$1.45 BILLION OF SUCH EXPORTS IN 1984.

+ON THE INDUSTRIAL FRONT, A LARGE NUMBER OF HONG KONG COMPANIES, BOTH LOCAL AND OVERSEAS OWNED, HAVE MANUFACTURING OPERATIONS IN CHINA. IN THE OTHER DIRECTION, IT IS ESTIMATED THAT DURING THE PAST FOUR YEARS CHINA HAS INVESTED SOMETHING LIKE US$4 BILLION IN HONG KONG IN A NUMBER OF FIELDS, INCLUDING TRADE, TRANSPORTATION, CONSTRUCTION, REAL ESTATES, MANUFACTURING AND FINANCIAL SERVICES.+

ON OTHER OVERSEAS INVESTMENT IN HONG KONG, MR JOHNSON SAID OVERSEAS INVESTMENT IN HONG KONG INDUSTRY HAD CONTINUED AT A GRATIFYINGLY HIGH LEVEL DESPITE THE POLITICAL AND ECONOMIC UNCERTAINTIES OF THE PAST FEW YEARS.

+THIS WAS CONFIRMED BY A SURVEY OF OVERSEAS INVESTMENT IN HONG KONG WE CARRIED OUT IN SUMMER 1984, WHICH REVEALED THAT DURING THE PRECEDING THREE YEARS SUCH INVESTMENT HAD INCREASED FROM UNDER US$1 BILLION TO US$1.5 BILLION, AND THAT THE NUMBER OF COMPANIES INVOLVED HAS INCREASED SIGNIFICANTLY AS WELL.

+MY OWN OBSERVATIONS IN THE COURSE OF MY DAY-TO-DAY WORK INDICATE THAT INTEREST INCREASED IN THE PAST FEW MONTHS, AND HAS BEEN MATCHED BY A RESURGENCE IN INVESTMENT BY THE LOCAL, HONG KONG CHINESE MANUFACTURERS WHO ACCOUNT FOR THE BULK OF THE MANUFACTURING ACTIVITY IN HONG KONG, + MR JOHNSON SAID.

15