BILATERAL trade between Germany and Hong Kong reached HK$70 billion in the last full year, according to figures from the German trade commissioner, Dr Thomas Schafer. He said in 1990, 1991, and last year the territory's imports grew by seven per cent, 12 per cent and 32 per cent respectively. During the same three years, Hong Kong's exports to Germany rose by 40 per cent, by another 40 per cent the following year, and then last year, fell back sharply - dropping by 14 per cent. ''That [fall] coincided with the world recession finally hitting Germany, on top of the growing costs of reunification,'' said Dr Schafer. A large trade surplus in Hong Kong's favour still remained - amounting to about HK$27 billion, Dr Schafer said. Germany's principal exports are machinery, motor vehicles, electrotechnical products and chemicals, while its imports from the territory are consumer goods, textiles, toys and watches. Trade with China is taking off following the lifting of sanctions. Last year, Chinese imports rose to more than 5.7 billion deutschemarks (about HK$27.01 billion) while exports to Germany soared to 11.6 billion deutschemarks. According to Chinese statistics, trade between the two countries has increased by 57 per cent in the first half of this year, and the German government echoed this, saying that it expected export growth of more than 50 per cent by the end of the year. When the German Economics Minister visited China in March, the value of the deals signed exceeded all expectations. The Chinese spending spree continued in September when Wu Ji, the Minister for Foreign Trade and Economic Co-operation, headed a delegation of 300 officials and businessmen on a visit to the federal capital, Bonn. During the visit, Mrs Wu signed 15 contracts, with a total value of US$850 million (HK$6.6 billion). Traditionally, Germany's investment in China has been centred in the north and the east, and focused on major infrastructure or factory projects. ''This is only to be expected, because it fits with some of Germany's key export-oriented industries in the area of heavy machinery, mining, textiles, transport systems, motor vehicles, telecommunications equipment, chemicals and pharmaceuticals,'' said Dr Schafer. ''Until recently, there have been few German investments in southern China, but we are now trying to promote the Guangdong province within the overall context of the regional opportunities.'' Domestically, Germany's own high growth area is in the former East Germany. ''We have impressive rates of growth there, but they start from such a low base and the region is still afflicted with huge infrastructural difficulties,'' said Dr Schafer. ''It is now abundantly clear that the costs of reunification were grossly underestimated by all sectors - government, unions and employers.'' ''No one was really fully aware of just how weak and uncompetitive the old East German industries were. With reunification, their previously protected markets simply vanished,'' he said. This shake out was across the board - mining and chemical industries collapsed under the infinitely stricter environmental laws now in operation, the motor industry found it could not even give away its product, and low-grade manufactured goods were unsaleable. Much now is changing, with enormous infrastructure projects designed to upgrade telecommunications and transport industries and protect the environment. The former East Germany's links with the Russians are actually being promoted as a potential asset. Many people in the eastern states of modern Germany were fluent Russian speakers, and understood the Russian ''mind-set'', said Dr Schafer.