TNAG-2467-FCO40-3591-Economic-situation-in-Hong-Kong-1992 — Page 59

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2.3 The different location and political development of Hong ng and Singapore over the next ten years suggests that while Hong Kong may well become even more oriented towards mainland China as trade

and investment links are increasingly followed by financial and other service links, Singapore's future may lie more in providing services to the new generation of NIE's, Indonesia, Malaysia, Thailand and in time perhaps the Philippines. For Hong Kong the risk of this development is that over time it will become less a

regional financial centre than China's window to international

financial services. Should China not reform in the way or at the

speed which recent Deng speeches might imply or, worse, should

conservative elements regain primacy in Chinese politics, Hong Kong

could find it has little to do to finance China's economic

development. A change in the political complexion in China and

between China and Hong Kong could also mean that foreign financial

companies, like the Japanese banks, no longer wanted to do business with or through Hong Kong.

REVIEW OF INDIVIDUAL SERVICES

Banking

2.4 A number of different sources of data are available on banking

in Hong Kong and Singapore, including the IMF, BIS and national

sources. Although these do not always provide completely

reconcilable data, they present a broadly consistent picture.

2.5 The number and composition of banks is illustrated in Table A overleaf. Comparing Hong Kong, Singapore and the UK, it is apparent

that both Far Eastern centres have much higher proportions of

foreign banks than the UK. A major difference between London and

Hong Kong on the one hand and Singapore on the other is that only

the last maintains a distinction between onshore and offshore

banking units. This reflects Singapore's historic development in

setting up the Asian Dollar market and its wish to discourage the

international use of the Singapore Dollar. It is also an indicator

of the tight regulatory environment which pervades Singapore.