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considerable market for Chinese textiles, simple machinery and other manufactured goods. From this trade surplus, from
remittances by Overseas Chinese in or through Hong Kong (estimated at £30-35 million in 1966) and from the operations of Chinese financial and commercial enterprises in Hong Kong, total foreign exchange earnings estimated at £200-210 million accrued in 1966 (over a third of China's total earnings of foreign exchange).
30. These earnings, which are regularly converted into sterling, have played a major role in financing China's trade deficits with other areas of the free world with the industrial countries of Western Europe in 1959-60 and again in 1965-66 and with Canada, Australia and other major grain
exporters to China.
31. Earnings in 1960-62 averaged some £80 million. Their rapid rate of increase by 1966 is unlikely to be maintained and from now on Hong Kong's relative importance as a source 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 Us 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; 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
as
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