TNAG-1873-FCO40-2661-Relations-between-Hong-Kong-and-China-1989 — Page 186

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13

avoided the weakness inherent in having a narrow and

(26) under-endowed resource base

18.

(c) Role of foreign investment

For most developing economies, foreign

investment is valued for several reasons; money, jobs,

In the case of technology and management skill.

(27)

Guangdong, foreign investment is most highly valued for the foreign exchange that comes with it and the number of

This is in new jobs that can be created as a consequence. line with Guangdong's need to build up a large production

Not until then is it and export base (paragraph 13). likely to attract quality foreign investment involving higher technology. It was reported that by the end of 1987, there were 5 100 Sino-foreign joint ventures and 10 000 outward processing plants in Guangdong. These Sino-foreign joint ventures were mainly in manufacturing and services sectors and reportedly employed up to half a million workers. Also, approximately one million workers were then employed in the outward processing plants, nearly all of which were commissioned by Hong Kong companies (paragraph 8). In both 1986 and 1987, foreign exchange earnings from processing fees amounted to US$280 million

(28)

(26) This has effectively prevented Guangdong from

adopting an import substitution strategy which requires a broad resource base on which to build up a comprehensive industrial structure. This strategy would be more suitable for more inland provinces in the central and western part of China, which are rich in resources and more remote from foreign trade.

(27) In most cases, the foreign partners are Hong Kong

companies.

(28) According to an official from Guangdong Foreign

Economic Relations and Trade Commission, the value of total processing fees did not increase in 1987 because some processing activities were converted to activities by joint ventures.

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