TNAG-2242-FCO40-3223-Most-favoured-nation-status-for-China-impact-on-Hong-Kong-1991 — Page 92

G.F. 324

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Conclusion

17.

In summary, if China loses it MFN status in the

United States, there is likely to be

(a)

of

2 reduction by 33% to 44% or of HK$27-36 billion

(US$3.5-4.6 billion) worth

Hong Kong'

re-exports of China origin to the United States.

Taking into account other related trade flowe

that would likewise be affected, in gross value

terms Hong Kong's overall trade would probably be

reduced by 5% to 7% or HK$69-91 billion

hillion) ·

Thie NONIA

Diitti

ng

(b) a loss in Hong Kong of around HK$7-10 billion

(US$0.9-1.2 billion) in income and around 32 000

to 43 000 in jobs as a direct impact

reduce the overall GDP by 1.3% TO 1 A

this impact in the proper context, the GDP growth

rate would be curtailed from its trend value

(5.5% in real terms per annum) by one-quarter to

one-third in the year of incidence; and

(c)

a further loss in income and jobs if China cute

back on its imports either from the United States

or generally.

ZMA

In the longer term, if manufacturing investment is diverted

elsewhere, Hong Kong's potential for economic growth

its role as a gateway to China would be undermined

considerably.

Economic Analysis Division Economic Services Branch Government Secretariat

Hong Kong

25 March 10an

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