G.F. 324
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14.
Furthermore,
as China needs to finance most of
its imports by the foreign exchange earned from its exports, removal of its MFN status in the United bound to reduce its export earnings and hence its ability to absorb imports. China sources slightly more than
one-quarter of its imports from Hong Kong, and this proportion would be even larger if re-exports through Hong Kong into China are taken into account. In general, Hong Kong's exports to China would be reduced in the event that China's ability to import is hampered. The impact of this
on Hong Kong
would be a further loss in GDP by a small fraction of a
a percentage noint
(C)
Longer-term
impact on investment and
business confidence
15.
when they involve
China's MFN status in the United States is an important factor which hac bccn taken for granted by Hong
themselves in
ventures in China, with a view to
States. The same applies to
Kong
companies
manufacturing investment
exporting to the United
foreign manufacturers who
Hong Kong. Removal of
heavy blow to these
manufacturing activities.
come to invest in China through
China's MFN status would deal a
investments and collaborative
Hong Kong and foreign companies alike would seek to relocate their production facilities out of China to other places in South East Asia, with the result that the operations would become more costly and less efficient. This diversion of investment would reduce further the longer-term potential for growth and income generation of the Hong Kong economy.
16.
In the event of a substantial sethark in
trade between China and the United States through Hong Hong Kong's position as a gateway for business in and
Kong,
with China would be seriously undermined.
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