TNAG-0938-FCO40-1157-Visit-of-John-Nott--Secretary-of-State-for-Trade--to-Hong-Ko-1980 — Page 260

Background Paper No 2

SECRETARY OF STATE'S VISIT TO HONG KONG, 26–30 JANUARY 1980

BACKGROUND PAPER: HONG KONG'S TRADE WITH CHINA

Trading links

1. Hong Kong has for many years been China's window on the Western world and has provided about one-third of its foreign exchange. China's new leadership is intensifying its efforts to extract benefits from the territory's continued existence.

2. China is the main supplier of Hong Kong's basic needs (particularly food- stuffs, textiles and oil) and Hong Kong is China's leading export market. Its modern and efficient port facilities also make it important as an entrepot for Chinese exports. China's demand for consumer goods from Hong Kong is limited and it is now running a favourable balance of over US $2 billion.

CHINESE TRADE WITH HONG KONG 1975-79

US $ Million

Jan-June

1975

1976

1977

1978

1979

Chinese exports (fob)

1378

1583

1734

2252

1288

of which retained exports

1057

1138

1248

1542

817

re-exports

321

445

486

710

471

Chinese imports (cif)

33

30

44

63

122

of which

From Hong Kong

through Hong Kong

Balance

6

5

7

17

33

27

25

37

46

89

+1345

+1553

+1690

+2189

+1166

Finance and Commerce

3.

Source: Hong Kong Government Statistics

Trade apart, there are strong commercial and financial links between China and Hong Kong. China's investment in Hong Kong amounts to well over US $2.5 billion and its active participation in commerce, banking, property development and shipping in Hong Kong provides non-trade eamings of over 33 31 billion a year.