CONFIDENTIAL # 3
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China.
China's role as a supplier of foodstuffs to Hong Kong is especially important in the case of livestock : in 1985, about 84% of the live pigs and 64% of the live
chickens consumed in Hong Kong were from China.
3.
Due to parallel trade and the devaluation of the
Renminbi, the price increases for foodstuffs imported from
China in the past few years have been consistently slower
than those for foodstuffs from other sources of supply
(Table 7). This has provided a dampening effect on the overall inflation rate in Hong Kong during those years.
4.
Because of land and other constraints, the local
agricultural sector is likely to shrink further in the
future. If, as in past years, China can continue to be a reliable supplier of foodstuffs at reasonable prices, this
development should not cause undue concern. Further, as a result of competition from other supplier countries and a shift in the taste of the local people in favour of
greater varieties of higher quality food, particularly
western food, and an increasing use of frozen food, other
sources of supply are providing a balance against any
tendency towards over-reliance on China. It is notable
that China's share of the imports of foodstuffs has actually declined from a peak in 1981, notwithstanding the slower rate of price increase of Chinese foodstuffs (Table
8).
5.
(b) Manufacturing
(i) China as a market
China is now the second largest market for Hong
Kong's domestic exports.
In 1985, it accounted for around
G.F. 326
CONFIDENTIAL ##
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