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deficit of £33 million. It is probable, however, that,
owing to the growth in the visible trade gap in 1979 and
1980, that the UK will have sustained a larger current
account deficit for these years.
PROSPECTS
4. It is certain that the UK derives considerable benefit
from its special position in Hong Kong and is better placed
in trade than would be the case if the Territory ceased to
be under British administration. Prospects for UK exports
are very good. Several major projects are planned in the
transport and power generation fields that could lead to
substantial exports for UK companies, i.e. Castle Peak 'B'
Power Station, the Mass Transit Railway Island Line, the
new airport, the Tuen Mun Light Railway, the Lantao/Mainland
Fixed Crossing.
ADVERSE FACTORS
5. This special position can however embarrass the UK when
it is seen as raising trade barriers against the exports
of its dependent territory. The Multi-Fibre Arrangement
comes up for re-negotiation this year and is likely to
result in more severe quota restrictions for Hong Kong
textiles.
Imports of electrical and telecommunications goods
from Hong Kong are growing (14% of imports from Hong Kong
in 1979) and are giving rise to calls for voluntary restraint
on the part of Hong Kong exporters.
FRINGE BENEFITS
6. Hong Kong plays a valuable but unquantifiable role as a
springboard for UK business activities in East and South-
East Asia, particularly in China, and this trade would be
hampered if Hong Kong became a bone of contention between
the UK and China. Prospects for a UK share in the Guang-
dong nuclear project are largely due to the fact that it
/would
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