TNAG-2212-FCO40-3172-Hong-Kong-annual-report-for-1990-1991 — Page 157

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Footnote Detailed facts and figures on the economy as a whole and on

individual sectors are given in the Annual Report "Hong Kong 1991" [available in the library of the House].

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.

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. Hong

Kong investments accounted for about two-thirds of the total

foreign investment in Chine 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

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