TNAG-2212-FCO40-3172-Hong-Kong-annual-report-for-1990-1991 — Page 129

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31.

Domestic exports remained weak with signs of recovery in the fourth quarter. Re-exports continued to be robust and provided the main impetus for the growth in total exports. Domestic demand, including both consumption and investment demand improved in the latter part of 1990,

following a sluggish performance earlier in the year.

32.

Notwithstanding the moderate activity, the economy was still operating close to its capacity, and the labour market remained generally tight in 1990. The unemployment and

underemployment rates stayed low even towards the end of the

year, while earnings of the local workforce continued to

rise rapidly even after discounting for inflation. The

local inflation rate remained high in 1990. Although there

was a slight easing in the earlier months, the oil price

rises since August, coupled with a pick-up in economic

activity in the latter part of the year gave rise to additional inflationary pressures. As a result, the confirmed inflation rate for 1990 is 9.9 per cent, compared

with 10.1 per cent in 1989.

Hong

33. Economic links between Hong Kong and China are mutually beneficial and fast increasing. The relationship is

particularly intimate in terms of trade and investment.

Hong Kong and China are now each other's largest trading

partner and largest source of external investment.

Kong's total exports to China in 1990 amounted to HK$158.4 bn, an ionrease of nearly 8% over 1989. of this reexports accounted for HK$111 bn. Imports from China,

valued at HK$236.1 bn, increased by 20%. Hong Kong

investments accounted for about two-thirds of the total

foreign investment in China and are particularly significant in Guangdong where around 1.5 to 2 million job opportunities are being provided by Hong Kong companies. Additionally, Hong Kong has become an important regional centre providing financial, professional and other business services to

China, and serving as a convenient venue for China to make

business contacts with the rest of the world.

ALAAEV/12

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