TNAG-1951-FCO40-2779-British-capital-investment-in-Hong-Kong-1989 — Page 97

CONFIDENTIAL #

Report on Capital Investment in Hong Kong

- Second Quarter of 1989 -

Summary

The growth rate of investment in plant

and machinery eased in the second quarter of

1989, in the line with the moderation in overall

economic growth. As an indication, the

year-on-year growth rate in real terms of

retained imports of capital goods slowed to

about 7% in the second quarter of 1989 from 18%

in the first quarter. The corresponding

increase in 1988 was 17%. While the growth rate of retained imports of industrial machinery for

manufacturing use remained moderate in the

second quarter, that of retained imports of

other capital goods showed a marked deceleration.

2.

Investor confidence has been

undermined by the unrest in China in May and

June. In the past couple of months, many investors were adopting a wait-and-see attitude, with their expansion plans deferred and

commitments held back in the interim. However,

given the time lag between ordering and actual

delivery, the full effect on the level of investment in plant and machinery will only show up gradually in the retained imports figures in the latter part of the year.

C.F. 326

CONFIDENTIAL 機密。