Government and business leaders said today President Bush's decision to continue favorable trade status for Beijing is welcome news for this British colony that relies heavily on commerce with China. Trade and Industry Secretary John Chan called Bush's move Thursday ``very good news from Hong Kong's point of view.'' In a statement, he noted that the business community and government had engaged in intensive lobbying during the past few weeks to explain how termination of special trade status would harm Hong Kong, which will return to Chinese sovereignty in 1997. Seto Fai, honorary president of the Chinese Manufacturers' Association, said the U.S. decision will help prevent Hong Kong from sliding into economic recession. ``Hong Kong is already experiencing a slowing of economic growth and could not afford to stand a blow from the United States,'' he said. ``Now, we have at least another year to breathe.'' The news drew little response from the stock market, which had rallied sharply earlier in the week on expectation that Bush would renew China's most-favored-nation trade status. The blue-chip Hang Seng Index today rose 20 points in early trading before finishing the morning session virtually unchanged at 3,049. The market had gained 130 points in the preceding five sessions, largely on anticipation of the U.S. decision. Most-favored-nation status gives Chinese exports to the United States the lowest possible tariffs. Denial would send tariffs rising sharply on about $12 billion in annual imports from China of textiles, toys and other products. Much of the Chinese exports to the United States are produced in joint-venture factories set up by Hong Kong investors in southern China. About 70 percent of Chinese products sent to the U.S. market are shipped through Hong Kong, Seto said. ``Hong Kong nowadays shares an inseparable economic link with China. Any threat to sanction China economically would inevitably drag us into it,'' said Carson Chan, assistant director for the Federation of Hong Kong Industries. He said termination of the special trade status for China would have resulted in at least 20,000 Hong Kong people losing their jobs in industries such as trade, transportation and banking. Hong Kong's economy already is experiencing high inflation and sluggish growth, with the gross domestic product forecast to rise only 3 percent this year. Industrialists expressed confidence that the U.S. Congress will not reject Bush's decision, despite opposition by some lawmakers.
