TNAG-2466-FCO40-3590-Economic-situation-in-Hong-Kong-1992 — Page 127

HONG KONG ECONOMY PROFILE

Econic Indicators

Population

Gross Domestic Product (US$):

Real GDP Growth Rate

2.8%

GDP Per Capita

(US$):

12,228

Inflation

:

9.8%

Unemployment

1.3%

1990

HONG

K ONG

ECONOMY PROFILE

1990

5.80 million 70.9 billion

HANS 094

1991

MARK

@@

No. 115 (11.2.92)

5.86 million* 78.6 billion*

4%*

13,400* 12%

п

1.9% (Sep-Nov)

1991

Total Exports

(US$):

82.04 bn.

(+12%)

98.19 bn. (+20%)

Domestic Exports

(US$):

28.96 bn. (+ 1%)

29.62 bn. (+ 2%)

Re-exports

(US$):

53.08 bn. (+20%)

68.57 bn. (+29%)

Imports

(US$):

82.38 bn. (+14%)

99.87 bn. (+21%)

Total Trade

(US$):

Trade Balance

(US$):

164.42 bn. (+13%)

+0.34 bn.

198.06 bn. (+20%)

-1.68 bn.

Official forecasts

Recent Trade Developments

-

After rising by 1% in 1990, Hong Kong's domestic exports increased by another 2% in 1991. While exports to the U.S. (-7%) declined in Jan-Nov 1991, sales to W. Europe (+4%) and Asia (+8%) increased moderately. Re-exports increased substantially by 29% in 1991, compared with a 20% growth in 1990. This was supported mainly by Hong Kong's cross-border manufacturing in Guangdong. (25,000 enterprises and 3 million workers in Guangdong are producing for Hong Kong companies, of which 19,000 enterprises and 2 mm. workers are in the processing business.) Over 80% of Hong Kong's re-exports is either originated from or destined for China.

Since 1990, there has been pressure in the U.S. for the withdrawal of Most Favoured Nation (MFN) status for China, which is important to Hong Kong's manufacturing activity in China and its trade outlook. The U.S. President decided to renew China's MFN status unconditionally in May 1991. While the House and the Senate did not agree with the President's decision, they failed to issue a joint resolution before the deadline (early Sept.) to override it. China's MFN status is thus preserved till June 1992. Nevertheless, the prospects for renewal in 1992 remain uncertain.

The U.S. administration ordered a full-scale investigation into China's import restrictions in mid-October 1991 under U.S. law Section 301. Subject to China's response, it may impose retaliatory measures in October 1992. This may affect Hong Kong re-exports.

The E.E.C. made a number of allegations against Hong Kong on dumping in the last two years. Many of them were dropped later. Today, anti-dumping duty only applies to Hong Kong video tapes (up to 21.9%) and small screen colour T.V. sets (2.1-4.8%) in the E.E.C.

- The U.S. meanwhile has imposed an anti-dumping duty of 3.7% on Hong Kong's photo albums and filler pages

and 5.86% on Hong Kong's acrylic sweaters.

- In Jun 1991 Mexico initiated an anti-dumping investigation into porcelain kitchenware from Hong Kong, and

in Oct it increased the anti-dumping duty on Hong Kong's denim products from US$57¢/kg to US$1/kg. Import liberalization prevailing in Japan, Taiwan and ASEAN countries has opened up new dimensions of trade. Economic reforms in East Europe have also unfolded new, albeit gradual, opportunities. Some Latin American countries (e.g. Mexico and Venezuela) have also been reducing import restrictions.

Economic Background

In the first three quarters of 1991, Hong Kong's GDP rose by 3.8%; official forecast for the whole year was revised upwards in August to 4%, based on the robust performance of the European market, improved sales to China, and dynamic growth in Asia. Official forecast for 1992 GDP growth is 5%. Consumer prices rose by 12% in 1991, up from 9.8% in 1990. On 6 Nov 1991, the government unveiled a package of regulatory measures, aimed mainly at property speculation, to curb inflation.

Labour shortage has slightly alleviated as unemployment rate increased from 1990's 1.3% to 1.9% in Sep-Nov 91. To ease the territory's tight labour market, the government started the import of skilled workers in 1989. It passed another scheme in January 1992 to import an additional 12,000 workers, who are permitted to stay for up to six years. The maximum number of imported workers allowed in Hong Kong at any point of time is 25,000.

While every effort has been taken to ensure accuracy, the HKTDC is not to be held liable for any error that may remain. Due acknowledgement to HKTDC Research Department should be made in quoting the contents. Reproduction in whole without HKTDC's permission is prohibited.

HKS

Research Department, Hong Kong Trade Development Council

38th Floor, Office Tower, Convention Plaza, 1 Harbour Road, Wanchai, Hong Kong.

Tel: 5844333 Fax: 8240249 Cable: CONOTRAD HONG KONG Telex: 73595 CONHK HX