TNAG-0841-FCO40-1050-Visit-of-Sir-Murray-MacLehose--Governor-of-Hong-Kong--to-Chi-1979 — Page 171

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CONFIDENTIAL

A.

તે

(g)

Alpine Dyeing

(3)

Hampers International (bus and truck assembly).

Features beneficial or injurious to Hong Kong

7.

In considering the benefits or disadvantages to Hong Kong in investing in China, it is essential to

distinguish between them and the benefits or disadvantages arising out of the opening up of China, regardless of whether Hong Kong people invest there or not. There is no doubt that the opening up of China presents considerable economic opportunities for Hong Kong. Investing in China is only one of those opportunities the benefits and disadvantages of which

are almost certainly a minor element in the total picture.

8.

One advantage of Hong Kong as a centre for industrial investment has been its ability to provide facilities for the manufacture of inexpensive sub- assemblies for further processing in more advanced

industrial centres overseas. As land and staff costs

increase, it is natural for Hong Kong industrialists to seek to diversify to territories with lower production costs. It is in principle no different from Hong Kong firms opening factories in Nigeria, Indonesia or elsewhere.

9.

The likely benefits to Hong Kong from such

investments in China are:

(a)

(b)

the availability of cheap sub-assemblies which would give finished Hong Kong products a competitive edge;

the releasing of scarce resources by trans-

ferring production for the low end of the market to China;

CONFIDENTIAL

/contd...