UK EYES A
THIS IS A COPY
THE ORIGINAL HAS BEEN RETAINED IN THE DEPARTMENT UNDER
SECTION 3 (4) OF THE
PUBLIC RECORDS ACT 1958
REASONS FOR PRESENT CHINESE POLICY
MK1
Page 1 of 5 pages
ECONOMIC
1.
The economic benefits to China from Hong Kong have not diminished in recent
years. Although the proportion of China's foreign exchange which is obtained
from Hong Kong may have decreased marginally in the past 5 years (due to the
expansion of China's overseas trade) it is still over one third. During the
period of expanding technological imports (1973-75) Hong Kong's contribution has
been particularly important in balancing the trade deficit with non-communist
industrial countries. Despite the increased diversity of China's trade Hong Kong
has remained the second largest market (after Japan) and as the Chinese product
range has become more varicd so China has been able to diversify her Hong Kong
sales. Most notably petroleum products have increased from $1 million in 1972 to
$62 million in 1976. Both the China Resources Company (CRC) and the Chinese Banks
in Hong Kong are in the middle of a Five Year Plan (1976-80) to boost China's
foreign exchange earnings through Hong Kong.
2.
Hong Kong has continued to perform its traditional entrepot role and its
value has increased in a period when China has been trying to boost its exports
while the mainland port facilities have lagged behind (eg in containerization).
Entrepot exports as a proportion of China's total exports to Hong Kong have reached
their highest level (28 in recent years. Trading through Hong Kong is still very
important in penetrating and developing certain export markets, for example
Indonesia, USA and Thailand. Hong Kong also provides a shop window (mini trade
fairs for Chinese products are now being staged), trade contacts, shipping facilities,
financial arrangements and commercial intelligence.
UK EYES A
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