THE ECONOMY
Over the past five years, the share of the United States in Hong Kong's total domestic exports has been declining, although it still remains as the largest market. On the other hand, the shares of domestic exports going to China, Germany, Japan, Canada and Australia, and to the South East Asian economies have increased. Moreover, Hong Kong has also 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 policies to facilitate its modernisation programmes. Rapid economic growth in the Asia-Pacific region over the past decade provided an added stimulus. Hong Kong, with 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, convenience 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 household incomes, there has 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 25 per cent in 1991. The contribution of transport, storage and communications to the GDP was stable at around seven to eight per cent until 1986, before rising to 10 per cent in 1991. The contribution of finance, insurance, real estate and business services to the GDP experienced considerable fluctuations. It rose from 15 per cent in 1970 to 24 per cent in 1981, but fell back to 16 per cent in 1984, mainly reflecting the slump in the property market. Thereafter it rose steadily, to 23 per cent in 1991.
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 27 per cent in 1992. 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 20 per cent in 1992.
Between 1982 and 1992, exports of services rose at an average annual rate of nine per cent in real terms, while imports of services were higher by 11 per cent per annum. The major components of Hong Kong's trade in services are shipping, civil aviation, tourism and various financial services. The shares of transportation services in total exports and
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