ENG-1985 — Page 25

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HONG KONG IN TOUCH WITH THE WORLD

financial centre, should also be able to increase its contribution of expertise in the financial and related services which link China with the rest of the world.

While the first half of 1985 saw Hong Kong's domestic exports to its former traditional markets decline, those to China grew by 70 per cent in real terms over the same period in 1984. Reflecting the adoption of more liberal economic policies, China's demand for imports increased rapidly, and included Hong Kong-made products as well as foreign products imported through Hong Kong. Unlike Hong Kong's domestic exports to other parts of the world, domestic exports to China include a significant proportion of semi-manufactures for use in Chinese factories.

In addition to being the largest source of Hong Kong's re-exports, China has become the largest market for re-exports through Hong Kong, China's share of this market rose from 22 per cent in 1983 to 34 per cent in 1984 and to 47 per cent in the first half of 1985 representing a growth of 140 per cent in money terms.

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The late 1970s witnessed the explosive re-emergence of Hong Kong's traditional role as the entrepôt for a nation whose determination to modernise its economy was exemplified by the adoption of its ‘open door' policy. In the process, Hong Kong has become China's second largest-trading partner, trailing only Japan, and China has overtaken the United States to become Hong Kong's biggest single trading partner. Between 1978 and 1984, the value of Hong Kong's domestic exports to China, shooting up at an average annual growth rate of more than 120 per cent, leaped from $81 million to $11,280 million. Re-exports also grew rapidly, from $214 million in 1978 to $28,060 million in 1984.

China's expansion and diversification of its direct trade and economic links with other parts of the world brought predictions of a choking-off in Hong Kong-China trade. Instead, Hong Kong has become an ever expanding conduit for China's trade with the outside world, relying on excellent communications and trade handling facilities and its historical position as the best and longest established door to China, a door that remained at least partly open when all others were closed.

The extent of this trade boom is revealed in figures for Hong Kong exports to China. For example, exports to China of textile yarn, fabrics, made-up articles and related products which in 1978 were worth $39 million topped $2,030 million in 1984. Shipments of telecommunications and sound recording and reproducing equipment leaped from 1978's $1 million to $2,050 million in 1984 – in itself an indication of changing trends in China's economy. Apparel and clothing accessories, worth a mere $400,000 in 1978 rose to $512 million in 1984. Hong Kong's total world trade (imports, domestic exports and re-exports) rose from 1978's $116,960 million to $444,810 million in 1984.

So, along with its proportional importance to total trade, Hong Kong-China trade growth has been reassuring for a territory in which the sum of imports and exports represents some 180 per cent of GDP, and one which remains vulnerable to any adverse factor affecting exports.

In harness with the growth in cross-border visible trade has come an expansion of invisible trade, as China seeks to update its knowledge of management techniques and to learn how best to apply modern technology. The flow of Chinese visiting Hong Kong to attend courses, and of Hong Kong experts going to China to give them, has risen steadily since 1979. While much of the emphasis has been on data processing and general computer applications, other fields of mutual interest and benefit have ranged from banking to industrial manufacturing management. And this from a 1 068 square kilometre territory which imports some 80 per cent of its food and a significant proportion of its fresh water from across the same border.

DI M..