THE ECONOMY
Since the late 1950s, the United States has been the largest market for Hong Kong's domestic exports, in place of the United Kingdom. Gradually, the share of domestic exports going to such countries as Germany, Japan, Canada and Australia, and to the South-east Asian economies has also increased. In recent years, China has become the second largest market for Hong Kong's domestic exports, while the relative importance of the United States, though still Hong Kong's largest market, has declined. Moreover, Hong Kong has diversified into other new markets, including countries in the Middle East, Eastern Europe, Latin America and Africa.
The Service Sectors
Over the past decades, the rapid growth in external trade has not only enabled Hong Kong to build up a strong manufacturing base, it has also provided the underlying conditions for the service sectors to flourish and diversify. Of particular note was the rapid growth and development in finance and business services, including banking, insurance, real estate, and a wide range of other professional services.
The significance of entrepôt trade re-emerged in the late 1970s as China embarked on its open-door economic policies to facilitate its modernisation programmes. Rapid economic growth in the Asia-Pacific region over the past decade provided an added stimulus. Hong Kong, helped by its strategic location and well-established transport and communications network, was in a favourable position to take advantage of these opportunities. Trading and other economic links between Hong Kong and the region generally, and China in particular, increased rapidly.
Over the years, Hong Kong has developed an efficient wholesale and retail network to cater for the growing consumption needs of a more affluent population. Supermarkets, large department stores and modern shopping centres have become increasingly popular. This development was reinforced by the rapid growth in tourism. Restaurants and hotels have also experienced a substantial increase in business. Furthermore, with higher house- hold incomes, there has always been a growing demand for services of a better quality to meet the rising standard of living. Thus, services in the community, social and recreational fields have also grown substantially.
Analysed by sectors, the contribution of the wholesale, retail and import/export trades, restaurants and hotels to the GDP varied between 19 and 21 per cent in 1970 to 1983, before rising to 24 per cent in 1990. The contribution of transport, storage and com- munications to the GDP was stable at around seven to eight per cent, before rising to nine per cent in 1987 to 1990. The contribution of finance, insurance, real estate and business services to the GDP experienced considerable fluctuations, however. It rose from 15 per cent in 1970 to 24 per cent in 1981, but fell to 16 per cent in 1984, mainly reflecting the slump in the property market. The contribution of this sector to the GDP then rose steadily, to 21 per cent in 1990.
Within the service sectors, the most notable increase in employment was in the wholesale, retail and import/export trades, restaurants and hotels sector, with its share in the total employed workforce rising from 16 per cent in 1971 to 19 per cent in 1981 and further to 23 per cent in 1991. This was followed by finance, insurance, real estate and business services, with its employment share rising from three per cent in 1971 to five per cent in 1981 and further to eleven per cent in 1991.
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