CODE 18-77
CONFIDENTIAL
Reference
China's Foreign Exchange Earnings from Hong Kong
17. China earns approximately one third of her total convertible foreign exchange earnings through Hong Kong, a proportion which has remained constant during most of the 1970s. The highe proportion is a reflection of China's importance as the main supplier of certain raw materials for Hong Kong, including foodstuffs and oil; the port: facilities at Hong Kong allowing it to act as an outlet for China's trade with third countries, and the strong commercial and financial links with Hong Kong which contribute to a substantial volume of invisible earnings.
18.
China's total receipts from Hong Kong are shown in summary form below:
Table 7: Convertible Currency Earnings from Hong Kong
1976
1977
1978 1979
(
US
million
Export earnings
1583
1734
2252
3300
Invisible and other foreign
exchange earnings
900
1100
1200
1400
Total
2833
2834
3452 4700
Total convertible currency
earnings
6045
6339
8285 12200
Proportion from Hong Kong (%)
37.1
34.6
31.8
31.5
19. China is Hong Kong's main supplier of basic raw materials, including foodstuffs, textiles, building materials and oil. In addition, the provision of efficient port facilities, coupled with shipping and insurance services, have enabled China to export to third countries through Hong Kong. In recent years total exports to Hong Kong have grown steadily and the colony accounted for some 21% of China's visible trade earnings in 1978. Since China's demand for manufactured goods from Hong Kong is relatedly low, China maintains a substantial surplus on visible trade with Hong Kong. It was US $2.6 billion in 1979 and US $1.5 billion in the first six months of 1980.
Table 8: Visible Trade with Hong Kong, 1976-80 (US # million)
1976
1977
1978
1979 1980
Jan-June
Chinese Exports
1583
1734
2252
3044
1949
of which retained
1138
1248
1542
1912
n/a
re-exports
445
448
710
1131
n/a
Chinese Imports
30
444
63
383
4-24.
of which from Hong Kong
through Hong Kong
5
7
17
120
137
25
37
46
263
336
Trade Balance
1553
1690
2189
2661
1475
CONFIDENTIAL
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