TNAG-2792-FCO40-4031-Relations-between-Hong-Kong-and-China-1993 — Page 84

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36.

The

precise

impact

the form, duration and intensity of

on the

Hong Kong

economy

the

Nevertheless, as the

drastic than those

be

period, any of the

An an

severe.

depends on

respective restraint measures.

measures adopted SO far are less

implemented in the last retrenchment

adverse impacts seems unlikely to illustration, the findings of а sample survey conducted recently by the Hong Kong Monetary Authority indicate that China's restraint measures have not resulted in any marked

outflow of funds from Hong Kong so far. Certain aspects of

Hong Kong's trade and investment with China could however

be

affected in due course. In particular, exports to China

for meeting its Own demand could show slower growth.

Investment in real estate projects could be less. But

outward processing activities, which are of primary importance to Hong Kong's export sector, are unlikely to be

dampened.

37.

For the time being, China's inflation has not produced much upward pressure on Hong Kong's consumer price inflation. This is largely due to the offsetting effect of the weak Renminbi and, to a lesser extent, also because of

the declining importance of China as a supplier of Hong Kong's retained imports (its share was only 8% in 1992). The retail prices in Hong Kong of consumer goods imported

from China rose by only 4.1% in the first half of 1993, considerably slower than the corresponding increase of 8.5%

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