TNAG-2212-FCO40-3172-Hong-Kong-annual-report-for-1990-1991 — Page 92

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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 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's total exports to China in 1990 amounted to HK$158.4 bn, an increase 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.

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