ENG-1996 — Page 88

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THE ECONOMY

Bank of East Asia and the Standard Chartered Bank, are among the best-represented foreign banks in China.

Hong Kong has been playing an important role as the major funding centre for China. As well as a direct source of funds, Hong Kong often serves as a window through which foreign funds are channelled efficiently into China for financing the various development projects there. So far, most of China's fund-raising activities in the territory have taken the form of syndicated loans, but more recently an increasing number of China-related banks and enterprises have raised funds through issues of negotiable certificates of deposit, bonds and shares. Since mid-1993, H shares have been listed in Hong Kong's stock market by large state-owned enterprises in China. At end-1996, a total of 23 such enterprises were listed on the Hong Kong Stock Exchange, raising a total equity capital of $26.8 billion.

The Economy in 1996

External Trade

Re-exports and domestic exports showed weaker performance in 1996 than in 1995. The strengthening of the Hong Kong dollar along with the US dollar after the second quarter of 1995 reduced the competitiveness of Hong Kong's exports in the world. market. The situation was further aggravated by the slow-down in import demand in some of the major markets, and the abrupt global downturn in the electronic product cycle. NAFTA could have also diverted to Mexico and Canada some USA import demand which was formerly sourced from Asia. For 1996 as a whole, the value of re- exports rose by 7 per cent. (As there was little price change, the increase in real terms

Growth in Hong Kong's visible trade (year-on-year growth rate in real terms)

Chart 7

Percent

50.0

Re-exports

40.0

30.0

20.0

10.0

Imports

Total exports

Domestic exports

-10.0

1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996

Re-export growth in 1996 was considerably slower than in 1995. Domestic exports declined. Imports also grew more slowly.