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FM HONG KONG 080855Z APR 83
TO IMMEDIATE FCO
TELEGRAM NUMBER 477 OF 8 APRIL
INFO IMMEDIATE HONG KONG GOVERNMENT OFFICE LONDON
YOUR TELNO 323 OF 6 APRIL.
MKKOaili
2014 2017` No
2 1 APR 1983
10
INDES
PA
CMD114
See 1
PQS: ECONOMIC RELATIONS BETWEEN HONG KONG, CHINA AND UK.
WE HAVE THE FOLLOWING COMMENTS ON YOUR PROPOSED REPLIES TO RAY
WHITNEY'S PQS:-
Q.7. THE PERIODIC RESEARCH DONE ON CHINA'S FOREIGN EXCHANGE EARNINGS FROM HONG KONG HAS ALWAYS ARRIVED AT THE CONCLUSION THAT RELIABLE FIGURES ARE IMPOSSIBLE TO PRODUCE. THIS IS BECAUSE OF THE EXTENT AND COMPLEXITY OF CHINA'S ECONOMIC INVOLVE-
MENT IN HONG KONG AND THE LACK OF OBLIGATION TO DISCLOSE REMITTANCES. AS SEEN FROM HERE, IT WOULD BE MISLEADING TO PLACE ON PUBLIC RECORD ESTIMATES OF CHINA'S GROSS FOREIGN EXCHANGE EARNINGS FROM HONG KONG. THE ONLY RELIABLE FIGURES ARE FOR VISIBLE EXPORTS FROM CHINA TO HONG KONG, AND WE SUGGEST THAT THE DRAFT ANSWER BE AMENDED TO DELETE ALL BUT THESE FIGURES. A SENTENCE
COULD THEN BE ADDED ALONG THE FOLLOWING LINES:-
''NO RELIABLE FIGURES ARE AVAILABLE FOR CHINA'S GROSS FOREIGN
EXCHANGE EARNINGS FROM HONG KONG. THE RANGE AND COMPLEXITY OF CHINESE ECONOMIC INVOLVEMENT ÎN HONG KONG AND THE LACK OF
STATISTICS ON REMITTANCES BY CHINESE OWNED ENTERPRISES IN HONG
KONG MAKES IT IMPOSSIBLE TO PRODUCE A SATISFACTORY ESTIMATE '',
Q.8.
WE SUGGEST THE ADDITION OF THE FOLLOWING SENTENCES AT THE
END OF YOUR PROPOSED REPLY:-
**IN ADDITION, HONG KONG, ALTHOUGH NOT GIVEN ASSOCIATE STATUS WHEN THE UK ACCEDED TO THE EEC, WAS INCLUDED IN THE COMMUNITY'S
GSP. (SQUARE BRACKETS BEGIN) EARLIER, HONG KONG'S ENJOYMENT OF
DUTY FREE ENTRY INTO THE UK UNDER COMMONWEALTH PREFERENCE HAD
ALLOWED HER TEXTILE INDUSTRY TO GROW AND DEVELOP (SQUARE BRACKETS
END)''
Q.9. WE BELIEVE THAT PURCHASES FROM AND SALES. TO THE ROYAL MINT
WILL BE INCLUDED IN THE VISIBLE TRADE FIGURES. HOWEVER, THERE ARE A NUMBER OF INVISIBLE ITEMS, FOR EXAMPLE, PENSION AND RETIREMENT
PAYMENTS TO EXPATRIATES WHO HAVE WORKED IN HONG KONG, BUT FOR
WHICH WE DO NOT HAVE FIGURES, AND OTHER CASH FLOWS WHICH ARISE
INEVITABLY FROM THE UK CONNECTION WITH HONG KONG AND IN PARTICULAR
FROM THE EMPLOYMENT IN HONG KONG OF LARGE NUMBERS OF UK CITIZENS.
IN THE MANAGEMENT OF HONG KONG'S RESERVES AND THE OVERSEAS ASSETS
OF HONG KONG COMPANIES USE IS MADE OF THE SERVICES OF THE CITY
OF LONDON, BUT AGAIN THE SIZE OF THIS INVISIBLE CASH FLOW IS NOT
KNOWN.
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