TNAG-0741-FCO40-945-Relations-between-China-and-Hong-Kong-1978 — Page 55

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TRANSACTIONS" WHICH IT WOULD BE INCORRECT TO INCLUDE AS AN ELEMENT OF CHINESE INVISIBLE EARNINGS FROM HONG KONG (E. INVESTMENT IN HONG KONG AND FINANCE FOR PURCHASES MADE

HONG KONG). DESPITE THESE CAVEATS, WE REALISE THAT FOREIGN CURRENCY PURCHASES HERE (WHICH ARE ONLY REPORTED BY BANKS ON A

VOLUNTARY BASIS SINCE EXCHANGE CONTROLS WERE LIFTED IN 1972) ARE ONE PART OF THE JIGSAW. HOWEVER, WE SUGGEST THAT WHERE THE RESIDUAL FIGURE IS USED IT SHOULD BE TREATED AS PART OF THE EVIDENCE AND NOT EQUATED WITH INVISIBLES EVEN IN QUOTATION MARKS. WOULD IT NOT BE BETTER FOR THE PAPER TO ADMIT THAT NO SIMPLE BASIS EXISTS FOR CALCULATING CHINA'S INVISIBLE EARNINGS FROM AND THROUGH HONG KONG ?

2. THAT SAID, WE ACCEPT THAT THE GROSS INVISIBLE FIGURES

SUGGESTED IN YOUR PARA.5 ARE PLAUSIBLE.

F

3. OUR ONLY COMMENTS ON YOUR PARA.2 ARE THAT SUBPARA (A) SHOULD

HAVE THE QUALIFICATION INSOFAR AS THEY ARE MADE THROUGH HONG KONG DOLLARS AND SUBPARA (C) SHOULD INCLUDE TOURISM, AN ITEM WHICH IS LIKELY TO BE OF GROWING IMPORTANCE IN CHINA'S INVISIBLE EARNINGS FROM HONG KONG.

MACLEHOSE

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ཡིན**

BT

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