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COLONIAL
OFFICE
C. WHAT ADVANTAGES DOCS CHINA DERIVE FROM HONG KONG?
1.
Contacts with tho Outside World. Hong Kong providos China with a window on the outside world, and with an oasy point of accoss for trado and travel. It has served as a contro from which to mount subversivo activities against the free world, particularly in the field of subversive propaganda.
2.
Forcim Exchango Earnings. China oarns a largo surplus on visible trado with the Colony (£170 millions in 1966). The bulk of China's exports to Hong Kong aro foodstuffs (40%-50%); there is also a considorablo markot for Chinoso textilos, simplo machinery and other manufactured goods. From this todo surplus, from romittancos by Overseas Chinoso in or through Hong Kong (ostinatod at £30 - £35 million in 1966) and from tho oporations of Chinoso financial and commercial onterprises in Hong Kong, total foroign oxchango earnings ostimátod at £200-210 million accrued in 1966 (over a third of China's total oarnings of foreign exchango).
3. Those earnings, which aro rogularly convorted into storling, have playad a major rolo in financing China's trade dofioito with other areas of tho from world with tho industrial countrios of Wostom Europe in 1959-60 and again in 1965-66 and with Canada, Australia and othor major grain exporters to China.
4. Earnings in 1960-62 avoragod some £80 million. Thoir rapid rate of increase by 1966 is unlikely to bo maintained and from now on Hong Kong's rolativo importance as a source of foreign oxchango may ovon gradually declino. Howover, it could romain the largest single source of earnings for somo years to comio,
5. China's Uso of Hong Kong's Trado Facilities. Hong Kong's domostic oxports to China aro negligiblo. Thoro is a modest re-export trade in ohonicals, baso motals, toxtilo fibros, o tc.; this is, howovor, steadily docrcasing as China ships moro and more goods from the original supplying countries.
6.
The valuo of Hong Kong's re-exports of goods obtained from China is bolioved to bo about £34 million (about 20%) in 1966. Thoso includo Chinose food specialitios, toxtilas, animal by-products and modicinos and arc scnt mostly to South East Asia, Japan and Europo. It is ovidont that China still finds it convoniont to uso Hong Kong and its variety of services. China's own trading organisations are not noarly so woll equipped as Hong Kong merchants to handle a variety of small orders from overseas markots; as time goos on, howover, they may be expected to improve their own facilities and rely loss on those of Hong Kong.
/7. Hong Kong
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