XN000022-1993-05-20 — Page 2

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THURSDAY, MAY 20, 1993

HK ECONOMY UNDERGOES UNIQUE TRANSFORMATION

HONG KONG HAS BEEN GOING THROUGH A DRAMATIC STRUCTURAL CHANGE IN ITS ECONOMY OVER THE DECADE OR SO SINCE CHINA OPENED ITS ECONOMIC DOORS, THE FINANCIAL SECRETARY, MR HAMISH MACLEOD, SAID TODAY (THURSDAY).

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"IT HAS ENABLED US TO ACHIEVE SOMETHING WHICH AS FAR AS I KNOW IS UNIQUE TRANSFORMATION FROM A PREDOMINANTLY MANUFACTURING ΤΟ A PREDOMINANTLY SERVICE ECONOMY, WITH UPGRADING IN THE QUALITY OF BOTH, WITHOUT AT THE SAME TIME INCURRING THE PAIN OF UNEMPLOYMENT," HE SAID.

ADDRESSING THE LUNCHEON MEETING OF THE NORDIC BUSINESS ORGANISATIONS, HE NOTED THAT RELATED TO THIS, TWO IMPORTANT CHANGES TAKEN PLACE IN HONG KONG'S EXTERNAL TRADE, NAMELY MARKET DIVERSIFICATION AND THE INTENSIFICATION OF LINKS WITH CHINA.

HAD

ON MARKET DIVERSIFICATION, HE POINTED OUT THAT IN THE FIRST FEW MONTHS OF THIS YEAR, CHINA HAD SURPASSED THE U.S. AS HONG KONG'S NUMBER ONE BUYER AND THE SAME TREND APPLIED TO THE EUROPEAN COMMUNITY

(EC).

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"THAT SAID, THE U.S. AND THE EC STILL REMAIN VERY IMPORTANT US, BEING OUR SECOND AND THIRD LARGEST TRADING PARTNERS RESPECTIVELY," HE SAID.

ON LINKS WITH CHINA, MR MACLEOD SAID HONG KONG WAS NOW CHINA'S LARGEST SOURCE OF DIRECT FOREIGN INVESTMENT, ACCOUNTING FOR ABOUT TWO- THIRDS OF THE TOTAL.

HE ADDED THAT HONG KONG'S EFFECT ON GUANGDONG PROVINCE WAS NATURALLY PARTICULARLY DRAMATIC.

"THROUGH INVESTMENT, MANAGEMENT AND THE PROVISION OF FINANCIAL, TECHNICAL, DESIGN AND MARKETING SERVICES, HONG KONG BUSINESSMEN INITIATE, SHAPE AND INFLUENCE MUCH OF THE INDUSTRIAL DEVELOPMENT IN SOUTHERN CHINA AND BEYOND TO BOTH PLACES' MUTUAL BENEFIT," HE SAID.

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AS A DIRECT RESULT OF THE RELATIONSHIP WITH SOUTHERN CHINA, THE MAKE-UP OF HONG KONG'S EXTERNAL TRADE HAD ALSO CHANGED DRAMATICALLY.

"IN 1981, EXPORTS OF GOODS MADE IN HONG KONG ACCOUNTED FOR TWO- THIRDS OF OUR TOTAL EXPORTS, WHILE RE-EXPORTS ACCOUNTED FOR ONLY A THIRD.

"TEN YEARS LATER, THE BALANCE HAD ALMOST EXACTLY REVERSED, WITH DOMESTIC EXPORTS DOWN TO ONLY 30 PER CENT OF TOTAL EXPORTS," HE SAID.

HE POINTED OUT THAT THE RELATIONSHIP BETWEEN HONG KONG AND SOUTHERN CHINA, AND PARTICULARLY, THE PEARL RIVER DELTA WAS ONE OF GROWING ECONOMIC INTERDEPENDENCE.

"NEITHER COULD EXPECT TO PROGRESS AT THEIR PRESENT RATE WITHOUT

THE OTHER.

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