TNAG-1483-FCO40-2037-Economic-situation-in-Hong-Kong-1986 — Page 187

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iii. the very rapid increase in textile machinery is not matched by other categories, though the 'other industrial machinery' series seems to have been increasing steadily since late 1985;

iv. the seasonal pattern of these imports is not clear, but levels seem higher in the second and fourth quarters and some flattening in growth may be seen in the third quarter's data for this year.

7. In the total figures presented in the half-yearly report, fall in transport equipment slightly more than offset rises in most other categories (the most rapid being in textiles machinery). While re-equipment and expansion in the textiles sector is to be welcomed (clothing and textiles still account for 40% of domestic exports, and 43% of manufacturing employment), the Territory needs expansion in less traditional, higher value-added sectors if rapid growth in manufactured exports is to continue. Textiles and clothing exports are likely to be squeezed by protectionist restraints and increasing competition from low-cost exporters.

This more detailed data then is certainly more encouraging, but the trends identified, particularly for non-textiles machinery are not yet firmly established.

8.

15 October 1986

Nick Hallett

LACO

N O Hallett

Economic Advisers WH 426C

233-5335