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Feranual Times artiale
with the USA of HK 3.1 billion was more than offset by the huge bilateral trade deficit of HK 4.8 billion with Japan.
Trade flexibility
13. The detailed indices in Tables 7(à), 7(b), 8(a) and 8(b) giving unit values and quantum of imports show the remarkable adaptability of Hong Kong traders and domestic producers to changes in the terms of trade. Thus the unit value of imports of wool, wool yarn and wool fabrics rose in 1973 (9 months) by 82.8%, 42.7% and 27.3% respectively, while the unit value of raw cotton imports fell by 12%. Against these price changes Hongkong's imports of raw cotton rose 28.6% by quantity, while imported wool and wool yarn fell respectively by 14.2% and 25.2%.
14. This capacity to 'shop around' shows up also in the direction of imports. Thus the unit value of raw material imports from Japan and Taiwan rose respectively by 27.3% and 28.6% but from the USA it actually fell by 2.6%. The corresponding volume changes showed a fall in raw material imports from Japan by 20.3% and from Taiwan by 9.8%, while from the USA they rose by 52.1%.
15. A striking exception to this is China. Though the unit value of raw material imports from China rose by 24.1%, the quantum also rose by 30.6%. One wonders what the explanation is.
Invisible trade
16. The omission of any reference to external trade in services is most disappointing. Last year's survey contained some interesting information about tourist earnings and their significance in off- setting the merchandise trade deficit and in contributing to GDP. It was hoped that some indication of the 1973 trend would be forth- coming, and perhaps also some comment on the other important sectors of the economy such as banking and shipping. It is estimated", for example, that Hongkong residents now control about 20m. tons of shipping and that the Colony might well overtake Britain in the shipping league tables by 1980.
17. The GDP components which appear in a separate publication do include estimates of the external balance of trade in services. The net surplus of service exports over imports accounts on average for about 10% of GDP and offsets a substantial part of the annual deficit in merchandise trade. It would be of interest to know what the gross flows are estimated to be and the relative import- ance of the main service industries.
Investment/GDP ratio
18. Last year's Chapter 3 on "Investment" showed that the gross value of investment (i.e. before allowing for depreciation) had been rising steadily as a proportion of GDP :-
As % of GDP
1968
1969
1970
1971 1972
Land, building and
construction
7.2
7.3
8.4
10.2
12.1
Plant, machinery and
equipment
9.0
10.4
12.2
14.0
12.2
capital formation Gross domestic fixed
16.2
17.7
20.6 24.2
24.3