XN000022-1993-08-27 — Page 8

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FRIDAY, AUGUST 27, 1993

OBSERVATIONS SO FAR SUGGEST THAT, BECAUSE THESE ARE NOT MBANT ΤΟ BE DRASTIC RETRENCHMENT MEASURES ACROSS THE BOARD, THEY ARE UNLIKELY TO LEAD TO AN ABRUPT DOWNTURN IN CHINA'S ECONOMY AND, IF So, THE IMPACT ON

THE HONG KONG ECONOMY WILL PROBABLY NOT BE SEVERE.

CERTAIN ASPECTS OF HONG KONG'S TRADE AND INVESTMENT WITH COULD BE AFFECTED IN DUE COURSE, BUT THE INITIAL IMPACT ON THE ECONOMY APPEARS LARGELY ABSORBED.

OF

CHINA LOCAL

IN THE EXTERNAL SECTOR, THE FORECAST GROWTH RATE IN REAL TERMS RE-EXPORTS IS REVISED DOWNWARDS FROM 25% TO 22%, MAINLY IN THE LIGHT OF THE ACTUAL PERFORMANCE OF RE-EXPORTS IN THE FIRST HALF OF THIS YEAR AND THE LATEST DEVELOPMENTS IN CHINA'S ECONOMY.

RE-EXPORTS TO MARKETS IN THE ASIA-PACIFIC REGION ARE TO REMAIN ROBUST.

EXPECTED

AS ΤΟ RE-EXPORTS TO MARKETS IN THE UNITED STATES AND THE EUROPEAN COMMUNITY, THE SIGNIFICANT GROWTH SO FAR THIS YEAR IS LIKELY то BE SUSTAINED NOTWITHSTANDING THE CONTINUED SLACK IN THE ECONOMIES CONCERNED.

ON RE-EXPORTS OF CHINA ORIGIN TO THE UNITED STATES IN PARTICULAR, RENEWAL OF CHINA'S MFN STATUS IN THE UNITED STATES FOR ANOTHER YEAR HAS PROVIDED SOME RELIEF, ALTHOUGH THE ISSUES OF MARKET ACCESS AND BILATERAL TRADE BALANCE THAT THE UNITED STATES KEEPS PURSUING WITH CHINA REMAIN AN ON-GOING CONCERN.

RE-EXPORTS TO CHINA FOR MEETING ITS OWN DEMAND COULD SHOW A SLOWER GROWTH IN THE NEAR TERM AS THE RESTRAINT MEASURES IN CHINA BEAR RESULTS.

A

BUT OUTWARD PROCESSING ACTIVITIES, WHICH ARE ASSOCIATED WITH MAJOR PROPORTION OF HONG KONG'S RE-EXPORTS INVOLVING CHINA, SEEM UNLIKELY TO BE AFFECTED.

DOMESTIC EXPORTS ARE FORECAST TO YIELD A SMALL DECLINE OF 1.5% IN REAL TERMS, AS COMPARED TO THE EARLIER FORECAST OF A 1% GROWTH.

THE OVERALL PERFORMANCE OF DOMESTIC EXPORTS WILL CONTINUE TO BE AFFECTED BY THE SHIFT IN THE COMPOSITION OF HONG KONG'S EXPORTS DOMESTIC EXPORTS TO RE-EXPORTS.

FROM

WITH

MOREOVER, THE STRENGTHENING OF THE HONG KONG DOLLAR ALONG THE U.S. DOLLAR AGAINST THE MAJOR CURRENCIES IN EUROPE AND EAST ASIA, EXCEPT THE JAPANESE YEN, IN THE LATTER PART OF LAST YEAR AND THE EARLY PART OF THIS YEAR WILL PROBABLY CONTINUE TO HAVE A DAMPENING EFFECT.

NEVERTHELESS, DOMESTIC EXPORTS TO THE ASIA-PACIFIC REGION GENERALLY AND TO CHINA IN PARTICULAR ARE EXPECTED то MAINTAIN A NOTABLE GROWTH.

ALSO THIS

THE FORECAST GROWTH RATE IN REAL TERMS OF RETAINED IMPORTS IS LOWERED FROM 11.5% TO 9%, MAINLY IN VIEW OF THE OUTTURN 50 FAR YEAR.

/THE DEMAND