TNAG-1051-FCO40-1301-China-s-economic-relationship-with-Hong-Kong-1982 — Page 38

BACKGROUND

1. Hong Kong has traditionally traded with the neighbouring

Provinces, Guangdong and Fujian, to obtain food, water and

other supplies. The relationship has become more important

to China's drive for modernisation. These Provinces enjoy

some economic autonomy, a sort of restricted capitalism.

They regard Hong Kong as a major commercial centre, entrepôt

and source of investment and technology, which can play an

important part in their modernisation programmes. Foreign

investors often use Hong Kong as a base for dealing with

China. Hong Kong market also show window for Chinese provinces

looking for foreign manufacturers and expertise.

Provincial

authorities have extensive investments in Hong Kong, and have

established joint ventures with Hong Kong based companies,

in addition to those set up by national Chinese concerns.

Most foreign investment in Guangdong Province and particularly

the Shenzhen Special Economic Zone is from Hong Kong.

Hong Kong and General Department Foreign and Commonwealth Office

15 December 1981