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Impact of Taiwan row in doubt

Adela Ma

POLITICAL wrangling between China and Taiwan is likely to affect the Hong Kong economy, but it is too early to tell how great the impact will be, according to government economist Tang Kwong-yiu.

Mr Tang, speaking at a post-Budget briefing yesterday, said the other external factor most likely to affect the economy would be the question of renewal of China's Most Favoured Nation (MFN) status by Washington.

He said forecasts for Hong Kong's gross domestic product (GDP) growth of 5 per cent for 1996 were based on normal circumstances in which MFN was renewed and China-Taiwan tension did not get worse.

Hong Kong's re-exports between China and Taiwan reached $109 billion last year, or about 10 per cent of all of the territory's re-exports.

Visitor arrivals from Taiwan last year were 1.6 million, which was 17.5 per cent of all arrivals for the year.

On the Budget, he said forecasts for growth and inflation rates for the coming year were appropriate.

He said there was a range of different opinions on the forecast GDP growth, with some saying it was too optimistic and others suggesting it was too conservative.

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