12
HONG KONG AS A PARTNER IN WORLD TRADE
Of even more significance has been the growth of the re-export trade in recent years. Some indication of the expansion in the volume of re-exports is given in Table 2, that is, from less than three times its 1966 size in real terms in 1976, to 7.5 times in 1981 and to almost 14 times by 1985. Another measure is the percentage of re-exports in total exports, which has expanded equally dramatically in recent years as follows:
1966
24.2%
1970
19.0%
1976
21.5%
1978
1981
1985
24.5%
34.2%
44.8%
From a low of less than 20 per cent of total exports in the early seventies, the proportion of re-exports had barely risen to the 1966 level by 1978. Since then, however, re-exports have increased their share very rapidly, to reach almost 45 per cent in 1985, and this despite the very considerable growth in domestic exports that has also taken place.
The greater part of this resurgence of the entreport trade has been China oriented. In other words, no sooner had China begun again to open her trading doors to the outside world than Hong Kong was standing ready to resume its old role as a major conduit for that trade, but this time expanded by the greater dimensions and improved communica- tions of the modern world. Table 5 shows the extent to which Hong Kong's re-exports, now grown to over $100 billion, are dominated by trade to and from China.
Table 5
China's Role in Hong Kong's Re-exports in 1985
$ million
Per cent share
Total re-exports involving China
Re-exports of China origin goods to rest of the world
Re-exports to China from rest of the world
China origin goods re-exported back to China
Re-exports from rest of the world to rest of the world
31,552
30.0
46,023
43.7
3,076
2.9
77,575
73.7
27,695
26.3
Total re-exports
105,270
100.0
-
Source: Hong Kong Trade Review 1985. Hong Kong Trade Development Council, May, 1986.
China has now become Hong Kong's biggest trading partner, accounting for almost 26 per cent of the territory's total exports and imports compared with 20 per cent for the next largest partner, the United States.
In addition to the growth in trade there has also been a large expansion of investment by Hong Kong enterprises in China, particularly in the new special economic zones and by Chinese interests in Hong Kong. Furthermore, Hong Kong is also acting as the gateway for many Western enterprises to do business with China and is providing expertise to assist in the process. Large numbers of tourists are also entering China through Hong Kong in addition to the millions of visits made to China by Hong Kong residents each year. In general, the economic links between Hong Kong and China are growing steadily in number and complexity and a large part of southern China, especially, is benefiting significantly from its rapidly expanding economic relations with Hong Kong. The growth of the Chinese economy is now beginning to pick up quite rapidly following the economic reforms of recent years. If it continues, it must be accompanied by a similar expansion in foreign trade, from which Hong Kong can only stand to benefit further.