#T
19.
Reflecting the effect of China's controls on foreign exchange spending, Hong Kong's domestic exports and re-exports to China declined in the fourth quarter of 1985. Given the fact that total imports into China were still growing rapidly, it appears that Hong Kong's exports were affected by China's import restrictions much earlier than exports to China from elsewhere. This can be explained by two factors. First, China's import controls are mainly directed at consumer items, which form the bulk of Hong-Kongis domestic exports and re-exports to China. Second, China's re-centralization of financial controls has dried up the financial resources of many provincial and county enterprises, many of which have set up representative offices in Hong Kong and were previously very active in arranging exports from Hong Kong to China.
20.
Analysed by products, domestic exports to China of office machines, telecommunications, sound recording and reproducing apparatus, and electrical machinery were in money terms 85%, 50% and 11% respectively lower in the fourth quarter of 1985 than in the same period in 1984. Domestic exports of textiles (other than garments) and miscellaneous manufactured articles, on the other hand, rose by 36% and 17% respectively. The improved domestic export performance of textile yarn in the fourth quarter of 1985 might be related to more outward processing activities as Hong Kong's domestic exports to major overseas markets showed signs of picking up towards the
end of 1985 (4). When compared with the corresponding
(4) The Chinese authorities recently announced that outward processing activities involving certain items of textile yarn and fabrics would in future be subject to strict scrutiny, in view of quota considerations.
CONFIDENTIAL # 3
No comments yet.
Private notes are available after approval.