TNAG-1873-FCO40-2661-Relations-between-Hong-Kong-and-China-1989 — Page 23

CONFIDENTIAL

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Indirect Trade between

China and South Korea via Hong Kong

CRC INF 10/89

(CEC 5/89)

Background

Both China and South Korea have been significant

participants in Hong Kong's re-export trade. Their respective importance can be seen from the table below:

Ranking as a source

of Hong Kong's re-exports

China

1st since 1959*

South Korea

5th since 1980

Ranking as a market for Hong Kong's

re-exports

1st since 1980

5th since 1986

* The first year that re-exports can be

distinguished from domestic exports in Hong Kong's trade statistics.

2.

One important factor contributing to the

increasing importance of both China and South Korea in

Hong Kong's re-exports in recent years has been the

particularly rapid growth of indirect trade between these two countries via Hong Kong. This has increased at the

rate of 70.5% p.a. in money terms over the past nine

years. Apart from the efficient infrastructural

facilities in Hong Kong, the lack of diplomatic relations

between China and South Korea and differences in their

political ideologies have also been important in bringing about such rapid growth.

CONFIDENTIAL #

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