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of foreign exchange may even gradually decline.
However,
it is likely to remain the largest single source of
earnings for some years to come.
China's Use of Hong Kong's Trade Facilities
32. Hong Kong's domestic exports to China are negligible.
There is a modest re-export trade in chemicals, base metals,
textile fibres, etc.; this is, however, steadily decreasing
as China ships more and more goods direct from the source of
origin. The value of Hong Kong's re-exports of goods obtained
from China is believed to be about £34 million in 1966 (about
20% of all imports from China). These include Chinese food
specialities, textiles, animal by-products and medicines and
are sent mostly to South East Asia, Japan and Europe. It is
evident that China still finds it convenient to use Hong Kong
and its variety of services, particularly its banking and
associated facilities. China's own trading organisations
are not nearly so well equipped as Hong Kong merchants to
handle a variety of small orders from overseas markets; as
time goes on, however, they may be expected to improve their
own facilities and rely less on those of Hong Kong. The
Chinese use their commercial dealings to exercise pressure
on those who trade with them, if not to support them at least
y not to oppose them openly. This pressure is an effective
weapon in their hands.
33.
Hong Kong is in addition a useful trading outpost for
China especially as regards commercial dealings with countries
with whom it does not have diplomatic relations. Preliminary
/negotiations
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