TNAG-1624-FCO40-2238-Relations-between-Hong-Kong-and-China-1987 — Page 142

A

CONFIDENTIAL

MEMO

From S retary for Economic Services

Ref. (9) in ESB CR 31/581/85 IV

Tel. No.

Date

To

Political Adviser

(Attn: APATI)) Ever by

CW2571

5-8102680

Your Ref...

in.. PA CR 1/1916/82 SF'A'

24 September, 1987

dated

13.9.87

•

Hong Kong/China Economic Relations

I enclose a note on Hong Kong's contribution to China's foreign exchange earnings which has been produced in response to your query of above reference.

2.

In considering changes in China's foreign exchange earnings and Hong Kong's position in relation to them a number of points should be borne in mind:

(a)

(b)

(c)

So long as Hong Kong is a major market for China's exports, it will remain a major contributor to China's gross foreign exchange earnings;

prior to 1978 China imported little from Hong Kong so that Hong Kong's gross contribution to China's foreign exchange earnings was very similar to its net contribution. However, even now, despite China now sourcing a significant part of its imports from Hong Kong, Hong Kong still makes a significant net contribution to China's foreign exchange earnings; and

so long as China is running an overall trade deficit, any trading partner with which it has a trade surplus will be particularly valuable to it.

Encl

HAME

(A.A. McLean)

for Secretary for Economic Services

G.F. 73C

CONFIDENTIAL #