CONFIDENTIAL
HUKK 020/10
6/11/6
HKK 020/10
9
人
CLAVED IN
ITR
12 NOV 1965
FROM:
W G Ehrman
DATE:
6 November 1985
[NR7AFI]
Sir Harding PS/Mr Rentón
Mr Ehrman
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Minith
Thank you
to Thomas
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Duttlers para
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8.
is right.
HONG KONG: TRADE WITH CHINA
R
Dr Wilson (o/r)
Mr Orr, FED
Mr Hallett, Economic
Advisers
Mr Hoare, RDFE
A
A
1.
Ministers may wish to be aware of a change in Hong Kong's
economic relationship with China over recent months.
Summary of Recent Developments in Hong Kong/China Trade
2.
In the first six months of 1985 Hong Kong's visible trade
deficit with China turned into a surplus for the first time since
1951 (see table 1, attached)
3.
Meanwhile China's gross foreign exchange earnings from Hong Kong have over the past 6 years increased steadily (they have almost
tripled in that period) and have remained at roughly 30% of China's
total foreign exchange earnings (see table 2, attached). In 1984 they amounted to 33%.
4.
Because of the very rapid increase in total Chinese imports
China's net foreign exchange earnings from Hong Kong (ie after the
cost of China's imports of goods and services from Hong Kong has
been deducted) have been declining since 1982 (table 2).
This year, because of the trade balance in Hong Kong's favour, it is possible
that Hong Kong will make по net contribution to China's foreign exchange earnings; China will spend as much in Hong Kong as it earns from the territory.
Significance of these Developments
5.
During the Hong Kong negotiations we made many presentations
to the Chinese based on the assumption that Hong Kong produces 30%
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