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centres.
bank.
Unlike most major economies, Hong Kong has no central
Those functions which might typically be performed by one
such as supervising financial institutions, managing official
foreign exchange reserves or providing banking services are carried
out by the note-issuing banks (the Hong Kong and Shanghai Banking Corporation and the Standard Chartered Bank).
11. At the end of 1988, there were 158 banks in Hong Kong licensed
under the Banking Ordinance, of which over a quarter were local
companies.
They maintained a total of 1,397 offices in Hong Kong.
In addition there were 148 representative offices of foreign banks
and 75% of the top 100 banks in the world are now established in
Hong Kong
Relations with China
12.
Approximately 1/3 of China's exports pass through Hong Kong.
Hong Kong and China are now each other's largest trading partners. Chinese investment in Hong Kong is substantial. Hong Kong, which is reported to be the most important source of external investment in
China, has been steadily increasing its commercial interests and
investment in the Pearl River delta area. It is estimated that Hong
Kong businesses employ, either directly or indirectly, some 1.5 to 2
million Chinese workers in this area. This has, in effect,
substantially expanded the production capacity of Hong Kong's manufacturing industry and made the economies of Hong Kong and South
China more interdependent.
13. Contacts between Hong Kong and the Chinese were consequently
becoming increasingly relaxed. They suffered an abrupt shock following Tiananmen Square. Business contacts are now starting to pick up again in this area which has become of mounting importance
to the present and future prosperity of Hong Kong. But the June
events in China caused a blow to confidence in Hong Kong which has
led investors to look harder at other markets as well.
14. The full impact of the turmoil in China on the Hong Kong economy is as yet impossible to assess. After several years of rapid growth a slowdown of the economy was already expected in
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