TNAG-1230-FCO40-1543-Visit-by-Richard-Luce--Minister-of-State-for-Foreign-and-Com-1983 — Page 177

IN CONFIDENCE

2.7

There was a visible trade deficit in 1982 of HK$15,509 million (approximately £1,500 million). However, trade in invisibles makes

an important contribution to Hong Kong's balance of payments. In 1981 Hong Kong's surplus on invisibles was estimated at

roughly HK$9,241 million over half of the visible trade deficit,

2.8 The balance of trade between the UK and Hong Kong is slightly in Hong Kong's favour. The British share of the Hong Kong market declined from over 11% in 1967 to only 4.2% in 1976, rose to 5.1% in 1979, and in 1982 stood at 5.0%. Hong Kong is now Britain's largest market in the Far East. British exports to Hong Kong in 1982 totalled €732 million (1981: £618 million), which also put Hong Kong well ahead of China (£100 million in 1982) as a market for British goods. The real growth of UK exports to Hong Kong in the 5 years ending 1980 was 12.6% p.a. British imports from Hong Kong in 1982 totalled £872 million (1981: £897 million). This left a trade

gap favouring Hong Kong of £140 million down 52% from 1981. A substantial proportion of British imports from Hong Kong in recent years has consisted of textiles and clothing.

2.9

-

Government revenue in 1982/83 was approximately HK$31,000 million (approx. £2,950 million), 40% of which came from direct taxes (mainly earnings and profits tax); 17% from indirect taxes (rates, excise duties, stamp duties, betting taxes, motor vehicle taxes); 15% from land transactions; and the remainder from other sources, such as payments for government services. Revenue for 1983/84 is projected at HK$32,300 (£3,080 million).

2.10 Government expenditure on consolidated account in 1982/83 was approximately HK$34,700 million (approx. £3,300 million). Some 40% was spent on social services, 30% on community services (transport, water supplies, amenities, etc), 13% on general services (administration and support services etc), 13% on security services (defence, police, immigration etc) and 4% on economic services (airport, posts, trade and industry etc). Expenditure in 1983/84 is projected at $35,000 million (£3,380 million). This would mean a "budget deficit of approximately $3,200 million, following one of approximately $3,700 million in 1982/83.

9

IN CONFIDENCE