TNAG-1623-FCO40-2237-Relations-between-Hong-Kong-and-China-1987 — Page 99

уражных

G.F. 326

CONFIDENTIAL # 3

(8)

(9)

Although the Chinese economy is likely to become overheated again in 1987, there are as yet only limited signs of China tightening its control on the economy, particularly with respect to importation of goods and services and inflow of foreign investments (paragraph 39).

Hong Kong's position as the most important source of foreign investment in China is unlikely to change in

1987. If anything, its lead over the other sources is likely to widen further (paragraphs 40 and 42).

(10) The very rapid growth of Hong Kong's trade with China in the first quarter of 1987 re-affirmed, among other things, Hong Kong's role as an important entrepôt for China. The outward processing activities, which were believed to have been growing

rapidly since early 1986, helped to explain the

remarkable flexibility demonstrated by Hong Kong's

manufacturing sector in satisfying the very

substantial increase in the volume of overseas

demand for its products (paragraph 41).

CONFIDENTIAL ##