TNAG-1623-FCO40-2237-Relations-between-Hong-Kong-and-China-1987 — Page 98

CONFIDENTIAL # 3

(4) The performance of China's external sector has

improved remarkably in recent months. Comparing the first quarter of 1987 with the same period in 1986, China's exports grew by 27%, while imports decreased by 5%. The visible trade deficit, at US$1.05 billion, was significantly smaller than that

recorded in the first quarter of 1986. Also an

invisible trade surplus of US$0.37 billion was

recorded in the first quarter of 1987 (paragraph 11).

(5) Hong Kong's domestic exports to China grew strongly

in the first quarter of 1987, by 77%. Part of this growth was probably related to increased outward processing activities. In the first quarter of 1987, re-exports to China increased by 48% (paragraphs 21 to 23). In the same period, imports

from China increased by 52% and re-exports of China

origin by 74% (paragraph 25).

(6)

(7)

Financial links between Hong Kong and China have further intensified, both in terms of the volume of

financial transactions and the types of financial

services provided (paragraphs 32 and 34). As China plans to increase its foreign borrowings this year,

fund raising activities in Hong Kong launched by China-interest organisations may further increase in

the coming months (paragraph 33).

China-backed companies continue to expand their

activities in Hong Kong. The CITIC, in particular, appears to be especially keen on infrastructural developments (paragraphs 37 and 38).

G.F. 326

CONFIDENTIAL #