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Kong's retained imports to 10.56%, compared with 17%

in 1987. Thus China's ranking among Hong Kong's major sources of retained imports fell from second to

the third, after Japan and Taiwan (paragraph 33).

(8) The volume of financial transactions between Hong

Kong and China continued to grow rapidly in the third

quarter of 1988 (paragraph 35) and Hong Kong's

important role as a loan syndication centre for China

continued (paragraphs 36 and 37).

(9)

Hong Kong remained the most important source of

direct foreign investment in China (paragraph 39). But two projects Hopewell's

Guangzhou-Shenzhen-Zhuhai superhighway and Hong Kong

Electronics Association's industrial estate, which

have attracted a lot of attention from the press have

run into some difficulties (paragraphs 40 and 41).

(10) In October 1988, there have been many reports and

rumours about the Chinese government undertaking a "house-cleaning" campaign with a view to restoring economic order and discipline, and eliminating malpractices in some PRC-interest companies in Hong

Kong (paragraph 42). But it is generally believed

that the large and well established PRC-interest companies will not be affected (paragraph 43).

(11) Although the retail prices of goods from China

increased at slightly faster rate than those of other consumer goods, their rate of increase was still well below the inflation rate in China (paragraph 46).

Even in respect of foodstuffs which were believed to be most influenced by imported inflation from China, the situation was less serious than many people have suggested (paragraph 47).

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