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THE ECONOMY
China for carrying out certain specific production processes. Because of the limited amount of usable land, Hong Kong's manufacturing industries are generally those which can operate successfully in multi-storey factory buildings. This, in practice, implies concentra- tion in the production of light manufactures.
Since the post-war years, many new industries have emerged and grown, the most notable ones being plastics and electronics. The textiles and clothing industries, however, remain prominent. Other developing industries include fabricated metal products, watches and clocks, toys, precision and optical instruments, and genuine and imitation jewellery.
Between 1973 and 1985, the value of net output by the manufacturing sector grew at an average annual rate of 15 per cent, while manufacturing employment grew at an average annual rate of only two per cent. Within the manufacturing sector, the most significant change occurred in the textiles industry. Over the period, the share of this industry in the net output of manufacturing declined from 27 per cent to 15 per cent, and its share in manufacturing employment from 21 per cent to 13 per cent. Offsetting this decline was the expansion of the clothing, electrical products and electronics, and professional and scientific equipment (including watches and clocks) industries. Between 1973 and 1985, their shares in the net output of manufacturing increased from 20 per cent to 23 per cent, from nine per cent to 14 per cent, and from one per cent to five per cent respectively, while their shares in manufacturing employment increased from 26 per cent to 30 per cent, from 11 per cent to 13 per cent, and from two per cent to five per cent respectively.
Domestic exports in 1987 consisted principally of wearing apparel and clothing acces- sories (33 per cent of the total value), electronics (22 per cent), textiles (eight per cent), plastic products (seven per cent), watches and clocks (seven per cent), electrical household appliances (three per cent), and metal products (three per cent). In terms of the shares in total domestic exports, the most significant changes over the past 10 years have been the decline in the relative importance of clothing (from 40 per cent in 1977 to 33 per cent in 1987), and the increase in the relative importance of electronics (from 15 per cent in 1977 to 22 per cent in 1987) and of watches and clocks (from five per cent in 1977 to seven per cent in 1987).
Market diversification is partly a result of the promotion efforts financed by the government. Since the late 1950s, the United States has become Hong Kong's largest export market, in place of the United Kingdom and the Commonwealth countries. Gradually, the share of domestic exports going to such countries as the Federal Republic of Germany, Japan, Canada and Australia, and to the economies in Southeast Asia has also increased. In recent years, Hong Kong has diversified further into new markets, including countries in the Middle East, Eastern Europe, Latin America and Africa. China, in particular, has become the second largest market for Hong Kong's domestic exports.
Financial Institutions
Hong Kong's financial sector comprises an integrated network of institutions and markets which, under various forms of regulation, provide a wide range of services and products to both local and international customers and investors.
Since 1981, deposit-taking institutions in Hong Kong have been classified into three separate groups, namely licensed banks, licensed deposit-taking companies and registered deposit-taking companies.
Banking licences are granted at the discretion of the Governor in Council in accordance with the provisions of the Banking Ordinance. At present, in order to be considered for a banking licence, a local company (that is, a company incorporated in Hong Kong and