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Hong Kong Posts Strongest Growth in 4 Years - 2002-12-02

The government says Hong Kong's gross domestic product grew by 3.3 percent in the third quarter.

David O'Rear, chief economist at the Hong Kong General Chamber of Commerce, said the new GDP data do not necessarily mean the city is recovering from its recession. "They were stronger than expected on the growth side but that was because of deeper deflation than we were anticipating," he said. "As prices fall, real GDP automatically rises so that's the reason we got better than three-percent growth."

He added that domestic demand is still shrinking, although a surge in re-exports to the Pearl River Delta region boosted growth overall. Re-exports are goods brought into Hong Kong and then shipped onward, usually to China, for further processing.

Hong Kong economist Joe Lo of Citibank said the lift in re-exports and exports is due in part to China's recent entry to the World Trade Organization. "After China's entry to the WTO, more international companies have set up a production base in China so they purchase more parts and components from other Asian countries and export to China for further processing. So this means intra-regional trade increased very strongly this year," he said.

Hong Kong's re-exports increased by more than 15 percent in value during October compared with the same month a year ago. Total exports climbed by close to 13 percent.

South Korea's beleaguered Hynix Semiconductor plans to convert at least $1.5 billion of debt into equity under a restructuring plan.

The Korea Exchange Bank released details of the plan, which included a recommendation that Hynix sell its non-core assets. Hynix, one of the world's largest semiconductor manufacturers, is mired in billions of dollars of debt as a result of over expansion.