Since the late 1970's however, China has adopted its open
door policy, and has been seeking positive economic development,
including foreign direct investment. China has an abundant and
diligent workforce, and labour costs are still far lower than in
Hong Kong; thus with Hong Kong facing increasing production costs
and China seeking economic development through the introduction
of foreign investment, the two have come to rely on and compli-
ment each other, as the combination makes very good economic
sense for both parties.
as
This combining of two economies is now actually taking place
the "South China Economic Area", which ties Hong Kong and
neighbour, South China. Hong Kong's manufacturing industries have
been shifting their production bases to South China, and such
migrations are evident in the flow of goods between Hong Kong and
China. According to Hong Kong Government statistics for 1990,
61.8% of the total imports from China to Hong Kong were produced
by firms which have links with the Territory; whilst 79% of Hong
Kong's domestically produced goods were exported to China. In
addition to this, 50.3% of re-exported goods from Hong Kong also
went to the mainland. Furthermore, 93.4% of Hong Kong based
enterprises consign their production to the local enterprises in
Guangdong province. Judging from these figures, one
one can see Hong
Kong becoming the operation centre for production bases in South-
!
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