TNAG-1873-FCO40-2661-Relations-between-Hong-Kong-and-China-1989 — Page 194

G.F. 326

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21

Development Strategy may further reinforce this relation as Guangdong's economy will become increasingly externally oriented. Guangdong will also be used as a bridge between Hong Kong and China's inland provinces, enabling the latter also to develop economically with help from Hong

Kong.

37.

(b) Long term future

If the present trend of development continues, a plausible development scenario in the long term is that Guangdong will concentrate on agricultural and industrial development while Hong Kong will become more specialized in services. Although the territorial frontier will remain (Hong Kong will continue to be a separate customs territory) and the labour markets will continue to be segregated, the boundary between the two economies are likely to become increasingly porous. A greater degree of economic interaction and integration is to be expected. For manufacturing activities, within the limits imposed by quotas and origin rules, specialisation on the basis of comparative advantage should tend to bring about complementary developments which would be beneficial to both economies in overall terms.

38.

At a city-to-city level, Hong Kong is likely to become a strong competitor of Guangzhou in the provision of business, financial and communication services to the towns and counties in the Pearl River Delta region and the special economic zones (traditionally, Guangzhou is the centre for such services). In the course of time, Hong Kong has the potential to become the "financial/commercial

(33) capital" of Guangdong by gradually taking over many

(33) This term is intended as a geographical expression and carries no implication for administrative

boundaries.

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