UK CONFIDENTIAL
7.
At the end of 1977 there were also some 53,000 Commonwealth and Irish Republic citizens in the colony (excluding HM Forces) of whom nearly a half (24,500) were UK citizens. There were in addition about 29,300 other aliens, of whom US citizens (6,200) were the biggest component.
WATER AND FOOD SUPPLIES
8. The colony has traditionally suffered from a shortage of water during dry seasons (November to March) and rationing has occasionally been imposed. Supplies are obtained mainly from catchment reservoirs, but about 25% is obtained from a source in China. Total storage now available is 67,339 million gallons (mg) which will increase to 127,339 mg on completion of the High Island Reservoir in mid 1979. A large sea water desalination plant with capacity of 40 million gallons per day has been completed near Castle Peak.
9.
The colony is dependent upon China for most of its food imports, though some of the rice comes from elsewhere.
TRADE AND INDUSTRY
10. Hong Kong's economy is based on a highly developed light industry sector, which exports 80-90% of its output, its activities as a financial centre, and entrepôt trade. The world recession seriously affected Hong Kong's economy in 1974-75 but as the worldwide situation improved so Hong Kong followed suit. The main industries are clothing and textiles (employing more than half of the colony's total industrial workforce), electronics (employing over 10% of the workforce), and toys. Hong Kong is one of the world's leading clothing, and also toy, exporters. Because these industries are so vulnerable to world economic fluctuations the government is encouraging investment in medium-heavy engineering. The second largest film industry in the world (in terms of number of films produced) is located in the colony catering mainly for the Overseas Chinese
market.
11. Foreign trade followed the pattern of economic recovery with dramatic increases in 1976 although these were not sustained in 1977 when total trade was valued at $20,072 million (imports: $10,451 million, domestic exports: $7,512 million, re-exports: $2,109 million). Japan accounted for about one quarter and China about one-sixth of Hong Kong's imports. Main markets for domestic exports, are North America and Western Europe which account for about 70% of exports evenly divided between them. The USA is the colony's largest single market with Hong Kong being the largest supplier of textiles to that country. Although the relative importance of the entropôt trade has declined over the past 25 years the free port status still continues to attract considerable business and re-exports accounted for 22% of total exports in 1977. Main markets for re-exports were Japan, Singapore, Taiwan, Indonesia and USA. Tourism is a large earner of foreign exchange (estimated at $815 million in 1977) and, together with the colony's other 'invisibles' obtained through banking and trading facilities, serves to offset the visible trade deficit which was $830 million in 1977. With the developments in the international monetary system in recent years Hong Kong has been able to provide a large international gold market.
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UK CONFIDENTIAL
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