Overseas Trade Services
HONG KONG AND CHINA/EAST ASIA REGION
11 Hong Kong has been of critical importance in bringing about the success of the open door policy and economic development of China in recent years. Between 1979 and 1988, Hong Kong was the source of two-thirds of the contractual value of foreign investment in China, as well as the large proportion of China's foreign loans. Approximately one-third of China's exports pass through Hong Kong, and Hong Kong and China are each other's largest trading partners. The events in Tiananmen Square in 1989 affected trade between China and Hong Kong but contacts have picked up and the economic relationship between both will continue to be of increasing importance to the future prosperity of Hong Kong.
12 Hong Kong is increasingly developing as the 'brain' of a wider South China economy, with design and marketing in Hong Kong itself, and manufacturing in the adjacent Chinese Special Economic Zone of Guangdong or further afield in the South East Asia region. Hong Kong manufacturers aim to develop an extremely flexible production system capable of responding quickly to an ever changing world consumer demand, with Hong Kong itself increasingly a centre for management, co- ordination and the highest value added parts of processing. This policy has enabled Hong Kong to establish itself as the tenth largest trader in the world. It is estimated that between 3 million workers in Guangdong Province are employed in some 19,000 enterprises owned by Hong Kong entrepreneurs, compared with fewer than 700,000 employed in manufacturing in Hong Kong itself. In addition there are 50,000 Hong Kong managerial middlemen based in the region. 93% of Hong Kong's outward processing in China is in the Guangdong area which accounts for 10% of China's industrial output, 19% of China's exports and more than half of all foreign investment in China. Most prominent UK-owned investments in Southern China are United Biscuits (biscuits) and Tootal (textile goods). Shell have signed an MOU to establish a refinery which will be the largest single overseas investment in China.
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Hong Kong's geographical location, its sophisticated financial system and efficient transportation and communications networks make it well placed to provide services to the region. Re-exports now account for over two thirds of total exports, China being the largest market for, as well as source of, Hong Kong's re-exports (31% and 58% respectively of the total for 1992).
OT2/2d
May 1993
LT43.39
dti
Recycled Paper
the department for Enterprise
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