TNAG-1051-FCO40-1301-China-s-economic-relationship-with-Hong-Kong-1982 — Page 145

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through Chinese banks.

12.

Direct trade between China and Hong Kong is increasing rapidly. The value of direct exports (including water) to Hong Kong in the first eleven months of 1980 was US$3,926 million (compared with US$2,696 million in the same period of the previous year), a rise of 48%. The value of China's re-exports through Hong Kong increased at a similar rate to US$1,509 million during the same period ($1,022 million in 1979). The composition of direct trade from China has altered little, the increases being in the value of foodstuffs, sand, fuel oil and water.

13.

It is difficult to assess the precise value of remittances to China through banks in Hong Kong. However, remittances are clearly still very important. It has been estimated that remittances from all sources in 1979 amounted to US$550 million and that this figure will be increased to some $1,000 million by 1985. A very high proportion of such remittances will continue to be channelled through Hong Kong. Apart from the traditional form in which currencies are sent, remittances in the form of food parcels, durable consumer goods and capital goods are also becoming increasingly common.

14.

At the same time, the rate of growth of Hong Kong's exports and re-exports to China has accelerated even more markedly. Hong Kong's long-standing trade deficit with China has thus shown a decline

in its usual rate of increase. Direct exports to China in the period January November 1980 were US$275 million (up 217%) whilst re-exports totalled US$793 million (an increase of 280%).

China's investment in Hong Kong

15.

Besides attracting Hong Kong investment into Guangdong, over the past two years China has increased its investment in Hong Kong. Some of the more obvious examples lie in the purchase of land for the development of commercial/residential buildings by China-controlled companies. These have been put to use as banks, insurance companies, shipping agencies, retail outlets, real estate holdings and manufacturing industries. is not possible to assess the exact extent of Chinese investment in Hong Kong. However, academic specialists have estimated that the revenue generated from Chinese investments in Hong Kong (i.e. excluding trade and remittances) has risen from about US$300 million in 1976 to US$520 million in 1979.

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