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Such deals create jobs for China's workers, give its managers modern manufacturing experience and generate foreign-exchange earnings. The Hong Kong companies, for their part, benefit from cheaper Chinese labor and can thus keep export prices low. In the future, Hong Kong may specialize in merchandising and putting sophisticated finishing touches on products. But the colony also has a number of unskilled workers, and some of them could be hurt in the process.
Other problems becloud the generally bright landscape. The Hong Kong dollar has lately slipped 8% against the U.S. dollar because the colony suffered from a $1.8 billion trade deficit last year and is experiencing double-digit inflation, caused largely by an influx of foreign investment and a sharp rise in bank loans for Hong Kong's overheated real estate and property development market.
A minority of businessmen wonder if Hong Kong may be undercutting itself by shifting operations to China. Says Jack Tang, chairman of South Sea Textile Manufacturing: "In effect, you're setting up a plant with the latest machinery and you're teaching the mainland Chinese production and marketing. When your contract expires, you find that you have just created more competition for yourself."
Other Hong Kong leaders respond that the colony's enterprises are much more efficient, innovative and market-oriented than those of the Chinese. A leading Hong Kong businessman, having returned from a tour of mainland factories, estimates that a Chinese factory as a whole is only one-seventh as efficient as one in Hong Kong. The general bullishness is summed up by Sir Lawrence Kadoorie, 79, a Hong Kong-born multimillionaire, who is negotiating to buy large amounts of Chinese coal for a new Hong Kong generating station that will supply electricity to neighboring Guangdong (Kwangtung) province. As he gazes out at Hong Kong's beautiful harbor, he asks: "Is there any place on earth where the future looks brighter than here?"