TNAG-2050-FCO40-2920-Visits-by-Lord-Caithness--Minister-of-State-for-Foreign-and--1990 — Page 32

CONFIDENTIAL

Background

Japanese Investment in Hong Kong

1.

Although the Japanese have declined to help over passports, they have supported our efforts to promote confidence in Hong Kong in other ways, eg by the continued high level of Japanese investment in the territory.

2.

Japan has a major economic stake in Hong Kong:

-

Japan is Hong Kong's 3rd largest trading partner after China and the United States, with 2-way trade worth more than US$13 billion last year. Japan accounts for 17% of Hong Kong's total imports (compared to the UK which accounts

for only 2.39%).

- There is more Japanese investment in Hong Kong than anywhere else in Asia (nearly one fifth of all Japanese investment in Asia is in Hong Kong).

According to MITI, Japan's cumulative investment in Hong Kong up to March this year was estimated at US$8

billion.

Japan is the second largest investor in Hong Kong's

manufacturing sector after the United States.

-

Japanese financial institutions account for more than

50% of the total assets of Hong Kong's banking sector. So

far this year, four more Japanese financial institutions have established their presence in Hong Kong.

- Similar growth is evident in the securities field.

Since June 1989, seven Japanese securities dealers have

established a presence in the territory. Three of these dealers have chosen it as their regional headquarters.

POMACB/3

CONFIDENTIAL