Question
a) State how each of the following transactions would be treated in Hong Kong's Balance of Payments accounts. Clearly mention the transaction that is responsible
a) State how each of the following transactions would be treated in Hong Kong's Balance of Payments accounts. Clearly mention the transaction that is responsible for each entry. (4 marks each)
(i) The Hong Kong government imports cars from Japan valued at HK$5m for official use and pays for the transaction by using the equivalent amount of Japanese Yen from its official foreign exchange reserve holdings.
(ii) An architect from Brazil is hired by a Hong Kong construction company for HK$ 1 m on a short-term contract with a Hong Kong construction to work on a project in Hong Kong. After the termination of her contract, the architect uses the money to buy a property in Hong Kong.
(iii) A US private equity firm sells its equity holdings in a Hong Kong company for HK$500m and uses the proceeds to buy the Ritz Carlton hotel in Hong Kong.
(iv) A Hong Kong textile company sells T-shirts in Germany worth 50m euros. The company uses the 50m euros to buy textile machinery from a German firm for its Hong Kong factory. (Assume 1 Euro = HK$10)
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