TNAG-1842-FCO40-2617-House-of-Commons-Select-Committee-on-Foreign-Affairs-enquiry-1989 — Page 107

PJZAGN (3)

2.

Trade and economic links with China

TRADE

Since 1985, China has been Hong Kong's largest trading partner. Now second largest market for Hong Kong's domestic exports, largest market for Hong Kong's re-exports and largest source for Hong Kong's

imports.

Hong Kong has recently overtaken Japan to become China's largest trading partner, accounting for more than a quarter of China's

external trade.

INVESTMENT

Hong Kong is most important source of foreign investment in China, both in terms of total number of projects entered into (75%) and total contract value (up to 70%).

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In recent years, Chinese companies have also made very

substantial investments in Hong Kong.

Bank of China, one of China's five state owned banks and probably largest with foreign dealings, has recently built major new Hong Kong headquarters building, in Central District of Hong Kong.

Bank of China also undertook to participate in rescue package for Hong Kong Futures Exchange in late 1987 (HK$333 million towards second HK$2 billion rescue package).

China Industrial Trust and Investment Corporation (CITIC) is closely involved in Hong Kong. It has 12.5% stake in Cathay Pacific Airlines. In June 1986 CITIC launched rescue bid for the Ka Wan

嚎

Bank which had fallen into financial difficulties. substantial overseas investments in Pacific Region.

CITIC also