TNAG-1847-FCO40-2622-House-of-Commons-Select-Committee-on-Foreign-Affairs-enquiry-1989 — Page 93

-3-

Invisible Eamings

11. Total earnings by British companies in the 'invisible' sector of the economy are very large but difficult to quantify. This sector includes the net earnings of overseas affiliates, dividends, tourism, students, insurance, banking and other services. From the limited information available (some for But this 1986 and some for 1987) annual earnings of £879m can be identified.

does not include earnings by insurance companies or consultants (there are more of both from Britain than from any other country), banking or other financial services, cargo revenue or hotel management.

12. It is therefore clear that the total annual earnings by British companies in the invisibles sector are considerably more than £1,000m.

Conclusion

13. There is no doubt that British commercial involvement in Hong Kong is extensive, complicated and it touches almost every sector of the economy. It is also clear from this review that British investment and management involvement remains the major overseas influence in Hong Kong business.

14. If Britain's 'invisible' earnings in Hong Kong (more than £1,000m) are added to the value of British merchandise exports to Hong Kong (£1,030m in 1988) and compared with the value of Hong Kong exports to Britain (£1,556m in 1988) and the much smaller 'invisible' earnings by Hong Kong in Britain, it is probable that the amount of business between Hong Kong and Britain is roughly in balance and worth in excess of £4,000m a year.

15. No attempt has been made in this review to assess the net value of Hong Kong investments in Britain. However, known purchases from Hong Kong of equity in British companies and of property in the last few years have amounted to over £1,000m. In addition, Hong Kong companies have established at least six manufacturing units in Britain.

14 March 1989

REH/mcs