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Although China's import control measures remain in force, the growth rate of domestic exports to China rebounded strongly in the second half of 1986 and further accelerated in the first quarter of 1987.
HK$5,552 million (US$712 million) in the first quarter of 1987, domestic exports to China were 77% higher than in
the same quarter in 1986. It is believed that a significant proportion of the growth in domestic exports
to China in 1986 and in early 1987 was attributable to
increased outward processing activities in China
(especially in the Pearl River Delta region). This is to some extent evidenced by the very rapid growth in domestic exports and re-exports of intermediate products like textile yarns and fabrics to China and the rapid increase in road freight traffic in both directions
(trucks have become popular as a means of transport because many outward processing plants are located in the Pearl River Delta region near Hong Kong.) Apart from the increase in exports to China associated with compensation trade and outward processing activities, it is likely that the strong Yen and the concern about the Chinese economy being over-dependent on Japan have induced China to switch from Japanese imports to imports from other
(8) sources, such as Hong Kong
(8) During 1986, the Yen appreciated by 46% against the
Reminbi, compared with an appreciation by 17% of the Hong Kong dollar against the Renminbi. Partly reflecting this, China's imports from Japan declined by 18% in money terms in 1986.
G.F. 326
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