ENG-1987 — Page 30

HONG KONG

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BUILDING FOR THE FUTURE

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demands placed on the infrastructure, in particular, arising from the mushrooming of Hong Kong's economic relations with China over most of the past decade and the directions they are taking.

If Hong Kong had continued to develop in the eighties along the same lines as it did in the sixties and seventies that is, depending mainly for its living on its own domestic exports of goods and services and maintaining only limited economic relations with China - the substantial developments described earlier, plus further incremental additions from time to time, would probably have been sufficient for the needs of the economy for some years to come. But this is clearly not the situation today. The opening of the Chinese economy to the outside world since the end of the 1970s and the adoption of more market-oriented policies have substantially improved the growth of production and incomes, and of trade with the outside world. This process has had a major and beneficial effect on Hong Kong.

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First, the amount of Chinese trade passing through Hong Kong, to take advantage of its modern port facilities and international shipping connections, has increased tremendously. Secondly, there has been an equally explosive growth in Hong Kong's re-export trade. Over the last decade its volume has grown at least six times and as much as 80 per cent of this involves China. Thirdly, the volume of direct trade between Hong Kong and the Mainland has also increased rapidly. A major factor in this has been the growth of processing activities being sub-contracted in China by Hong Kong manufacturers, much of them in their own factories. As many as one million Chinese workers may be involved in one way or another in this activity, and the materials they are engaged in manufacturing have to be moved from Hong Kong and back again by the transport system.

In addition, there has been a very considerable growth in travel between Hong Kong and the Mainland. Visits by Hong Kong people to China now total some 12 million a year. Almost 750 000 overseas visitors a year are also travelling to China through Hong Kong. This has added to the pressure on cross-border transport facilities, by rail, road, sea and air, on top of the very large growth in freight traffic.

As examples of increasing demands on Hong Kong's port and airport facilities, the number of containers handled in the port increased by 50 per cent in three years, from 1.84 million 20-foot equivalent units (TEUs) in 1984 to 2.77 million in 1986; and the expansion in 1987 (3.4 million) has been even greater, at 22.7 per cent. The number of passengers handled at Kai Tak airport has also increased from 8.6 million in 1982 to 12.7 million in 1987, or by 47.6 per cent in five years; and airfreight movements have risen from 306 000 tonnes to 611 700 tonnes, or by 100 per cent over the same period.

Finally there has been an equally impressive expansion in investment by Hong Kong companies in China and by Chinese-owned companies in Hong Kong. And Hong Kong has acted as a gateway for other countries to trade with, invest in, travel to, and conduct business negotiations with, China. It is small wonder then that China is now Hong Kong's largest trading partner and that Hong Kong is China's biggest export market.

The growing inter-relationship of the two economies which all this illustrates has undoubtedly done much to assist Hong Kong's economic growth over the last few years. On the other hand, the growth in the volume of trade and other activities has made bigger and bigger demands on Hong Kong's economic infrastructure, particularly its transport facilities, and there is every indication that these demands will continue to grow in the future. This is what has created the new threshold - essentially a threshold in transport and other economic infrastructure that will need to be crossed to ensure, not only the continuance of Hong Kong's own economic growth, but also its continued usefulness to

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