TNAG-1039-FCO40-1289-Future-of-Hong-Kong-1981 — Page 209

DRAFT

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ANNEX E

DSR 11C

UNITED KINGDOM/HONG KONG ECONOMIC RELATIONS

1.

Up-to-date figures are lacking in some areas, parti-

cularly invisibles. From the data available, the pros and

cons appear to be about even. The UK runs an overall

current account deficit with Hong Kong, but the amounts

involved are not substantial. UK investment in Hong Kong

is relatively small and is partly offset by return invest-

ment in the UK. The value of Hong Kong as an entry point

for the Chinese market is at present small, but it is

likely to increase. Another growth sector is UK export

credits to Hong Kong: while not large in real terms, it is

accepted m'the

the largest single slice of total ECGD business at risk.

national untered.

VISIBLE TRADE

2. Hong Kong is the UK's second largest trading partner in

Asia, after Japan, the volume is however not great, compri-

sing between 1% and 2% of total UK trade. The UK takes

about 8% of Hong Kong's exports and provides some 5% of the

territory's imports. The UK maintains a fairly large

deficit with Hong Kong in visible trade: in 1980 the UK

exported £559 million worth of goods to Hong Kong and

imported £850 million worth from Hong Kong, leaving a deficit

of £291 million. Despite increases in British exports, the

gap has widened in the last five years.

INVISIBLES

3. UK earnings on invisibles close the trade gap to some

extent. The last available figures are for 1977 and are

based partly upon estimates. There was a private sector

surplus on invisibles that year of £156 million and a

deficit on official transactions of £55 million, leaving a

balance of £101 million. The UK trade deficit with Hong

Kong for 1977 was £134 million so there was a current account

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/deficit 89280 Dd 532113 200M 2/79 StS