TNAG-1370-FCO40-1816-Relations-between-Hong-Kong-and-China-1985 — Page 60

CONFIDENTIAL #2

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25.

Although Hong Kong recorded a large visible trade surplus with China of HK$6.9 billion in the first

half of 1985, Hong Kong's economic value to China has not diminished. The fact that China chooses to spend its foreign exchange earnings in buying Hong Kong products or foreign goods through Hong Kong should not affect Hong

Kong's role as an important source of foreign exchange earnings for China. Apparently, the Chinese authorities

are still concerned with the overall balance of trade, not

with achieving balance on a bilateral basis, unlike some

other socialist countries.

26.

Apart from its tangible contribution in terms

of foreign exchange earnings to China, Hong Kong is also an important access point for the transfer of technology and management skills into China. As Hong Kong's market economy is probably among the world's most liberal and

most competitive, it is a good training ground for Chinese companies and their staff. Thus Hong Kong has an important role to play in China's modernisation programme.

27.

A statistical appendix on Hong Kong-China

economic relations is attached.

Economic Analysis Division Economic Services Branch Government Secretariat 18 October 1985

CONFIDENTIAL

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