In addition, Hongkong businessmen have established more than 22,000 factories on China's mainland, 76 percent of the total of foreign-invested enterprises in China.

The following figures may help better illustrate the important role Hongkong plays in China's modernization drive.

An Important Shipping Center

 

Before 1979, the commodity trade between Hongkong and the mainland was confined to goods for daily consumption and small quantities of industrial raw materials. Annual shipping capacity was limited to 2 million tons. By the late 1980s, along with booming trade and the establishment of numerous enterprises by Hongkong businessmen in the mainland, shipping capacity had reached 18 million tons, an eight-fold increase over 10 years ago. Land and inland river transportation capacities had increased an average of 33 and 15 percent respectively.

According to statistical data compiled in Hongkong, air, marine and land transportation capacity between Hongkong China'' mainland reached 29.53 million tons in 1990. Land transportation made the most rapid increase, 28 times that of 1980. At present, more than 12,000 cargo trucks shuttle between Hongkong and the mainland everyday, forcing customs to prolong its service time even on holidays.

In 1990, Hongkong-mainland air, marine and land transportation capacity amounted to 34 percent of Hongkong's total and transportation between Hongkong and South China made up 60 percent of Hongkong-mainland transportation capacity.

An Important Base for Mainland Financing

  

Greatly concerned about the modernization drive on the mainland, the Hongkong banking sector has been taking full advantage of its position as an international financial center to raise funds for mainland construction. Within the last 10-odd years, China put to use a total of US $ 19 billion in foreign investment, of which US $11.9 billion, or 60 percent, was from Hongkong.

As to the debt-and-credit relationship between Hongkong banks to their mainland partners reached US $14.941 billion, with a monetary claim of US $9.024 billion. In 1991 several Hongkong banking syndicates invested heavily in the mainland, in projects such as the Guangzhou-Shenzhen-Zhuhai Expressway, which was financed by 29 banks in Hongkong, for example. Talking about the business and economic relationship between Hongkong and China's mainland, Mr. Zhou Nan, director of Xinhua News Agency in Hongkong revealed on March 24, 1992, that Hongkong ventures and foreign ventures in Hongkong made up 70 percent of the foreign investment in China in 1991.

Hongkong banks have also been active in making indirect syndicated loans to non-banking sectors on the mainland. According to Asian Finance, indirect syndicated loans between 1985 and 1988 totaled US $8.3 billion, 80 percent that were arranged by Hongkong financial institutions.

In addition, many foundations aimed at a mainland investment have been set up. The Hongkong stock market is serving as a base for quoted companies to raise funds for development of their mainland businesses. In 1991, the East Asia Bank in Hongkong opened branches Xiamen, Fujian Province, Shenzhen, Guangdong Province, Shanghai, and an office in Guangzhou. A complete business network of the bank has now taken shape in China's southeastern coastal area.

An Important source of Hidden Revenue

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The rapid development of Hongkong's tourism industry in the 1980s owes a lot to China's open policy. In 1978, before the implementation of the open policy, only 1.7 million tourists entered the mainland via Hongkong, 1.5 million of which were Hongkong compatriots. In 1990, however, the number jumped to 22 million. The frequent comings and goings have spurred on the tourism of both and brought the mainland huge hidden revenues.

According to the Hongkong-Macao Economic Quarterly, Chinese tourist volume and revenues have broken the record set in 1988. With the launching of Visit China' 92, measures have been taken to improve service quality and to solicit more tourists. Political stability and to solicit more tourists. Political stability and the constant economic growth are expected to bring 10 percent more tourists than in 1991, from which Hongkong will benefit considerably.

The Biggest Trade Partner of China's Mainland

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In 1979, when China had just opened to the outside world, the volume of trade between Hongkong and the mainland amounted to only US $3.4 billion. With the rapid development Chinese foreign trade, Hongkong, as a transshipment port, has seen a sharp increase in the volume of trade with the mainland. In 1987, Hongkong surpassed Japan to become the mainland's biggest trade partner. In more detail, mainland imports from Hongkong reached US $14.3 billion while mainland exports to Hongkong exceeded US $26.7 billion, comprising 27 percent and 43 percent of the respective totals.

According to statistics issued on April 10, 1992, by the statistics department of the Hongkong government, Hongkong's 1991 export trade value with the mainland made up 29 percent of the its total. This is 8 percent more than with the United States, which further proves the position of the mainland as the biggest export trade market. Transshipped goods from the mainland increased by 31 percent while those to the mainland grew by 38 percent over 1990 figures.

Since 80 percent of Hongkong exports, 50 percent of transshipped goods, and percent imports are concerned with the processing activities of Hongkong businessmen on the mainland. Export trade is chiefly responsible for the constant growth of the Hongkong economy. Meanwhile, it has made Hongkong the stronghold of the mainland's foreign trade and the biggest channel of currency (25 to 30 percent of the mainland's foreign currency is obtained directly or indirectly from Hongkong).

A Bridge between the Straits

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Since Taiwan authorities lifted the ban on investment in the mainland in 1987, Taiwan ventures have been flooding into the mainland. As direct investment and trade are forbidden, Hongkong naturally serves as a bridge between the Taiwan Straits. Statistics show that with the help of Hongkong, a Taiwan investment of US $2 billion out of the agreed US $4 billion has been made since the mid-1980s to finance some 3,000 projects. In the first quarter of 1992, when Taiwan investment in foreign countries and vice versa were both afflicted by a negative growth, the indirect investment by Taiwan in the mainland has been increasing. According to relevant documents from Taiwan, the approved indirect investment in this period, amounting to US $34 million, will finance 65 projects in the mainland.

Besides, Hongkong, as a transshipment port, handles three-fourths of the commodities from across the Straits. In 1990, indirect trade volume amounted to US $4 billion, 8 percent of Hongkong's entrepot trade value.

According to Mr. Li Jian, manager-in-chief of the Hongkong-Taibei trade Center, 1991 export trade value between the Straits was approximately US $5.2-5.5 billion and is expected to reach US $6-6.5 billion in 1992. The progress couldn't have been made without Hongkong. According to the statistics department of the Hongkong Government, the total value of transshipped goods from Taiwan in 1991 was 38 percent more than that in 1990, amounting to HK $40 illion, a considerable part of which has entered the mainland market.