TNAG-1036-FCO40-1286-Future-of-Hong-Kong-1981 — Page 151

3A

9401

Mr Williamson (HKGD)

CONFIDENTIAL

HKCK Guoli

Reference

RECEIVED IN REGISTRY NO. 51

12 FERIS

HONG KONG: ECONOMIC IMPORTANSDEXTOT

DESK OFFGER

UK

REGISTRY PA Action Taken

PA

(future)

$4.2.

4.2.

1. In your minute to Mr Broadbent of 8 December you asked for some facts and figures on the importance of the Hong Kong economy to the UK.

2/2

2. I attach a note containing the information you asked for. I have included a section entitled "The current account" which summarises the information contained in the section on visible and invisible trade. The note does not attempt to answer some other points which may be relevant to the exercise you are engaged on. While it is apparent that Hong Kong accounts for a large share of UK imports of clothing, this raises other questions including the contribution to relatively low clothing prices in the UK and the impact on employment in the domestic clothing industry.

3.

Unfortunately some of the data you asked for is out of date or simply unavailable. This applies particularly to information on invisible trade with Hong Kong where the latest estimates from the CSO are for 1977. I have included some information on direct investment, but am waiting for later figures from the Department of Industry. I will forward these when they arrive. Information on ECGD commitments has been obtained directly from ECGD. I have summarised the significance of China's foreign exchange earnings from Hong Kong in the final section of this note. Since writing this the DEI have sent me a recent report on this subject, which I have attached as a further annex. It covers similar ground as my own summary, but in addition stresses the significance of the establishment of the special Economic Zone in Shenzhen, near the border with Hong Kong.

4. Information on visible trade has been taken from UK official statistics and is readily available. I am also attaching comparable data from Hong Kong statistics which shows the value of their trade with the UK (Annex B), including the value

of re-exports from Hong Kong which are not shown in the UK data; the UK share of Hong Kong's principal exports (Annex C) and the comparative share of Hong Kong's main exports in the UK imports market (Annex D).

J. Exeter

J J M EXETER ESID

6 January 1980

cc: Mr Paul (BED)

CONFIDENTIAL

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