THE ECONOMY
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total imports of services were 48 per cent and 32 per cent respectively in 1991. Travel services accounted for 33 per cent of the total value of exports of services and 48 per cent of the total value of imports of services. The corresponding shares for financial and banking services were six per cent and three per cent respectively.
Increasing Economic Links between Hong Kong and China
Since the adoption of open door policies by China in late 1978, Hong Kong's economic relations with China have undergone rapid growth and development.
Hong Kong and China are now each other's largest trading partner. In 1992, the total value of visible trade between Hong Kong and China amounted to $628 billion, representing an increase of 25 per cent over 1991. This rapid growth reflected partly the buoyant economic conditions in China and partly the sustained growth in outward processing trade.
In 1992, China was the second largest market for Hong Kong's domestic exports, accounting for 26 per cent of the total. China was also the largest market for, as well as the largest supplier of, Hong Kong's re-exports. About 86 per cent of the goods re-exported through Hong Kong were either destined for, or originated from, China.
In addition to trade in goods, Hong Kong also serves as an important service centre for China generally and South China in particular. This includes the provision of infrastructural facilities such as the port and airport, as well as institutional supports such as financial and related business services. This is evidenced, among other things, by the increasing importance of Hong Kong as a centre for entrepôt, transhipment and other supporting activities involving China.
Hong Kong has always been a convenient gateway to China for business and tourism. In 1992, 21 million trips to China were made by Hong Kong residents, and another 1.7 million trips to China were made by foreign visitors through Hong Kong. These represented increases of 13 per cent and 28 per cent respectively over 1991.
Besides visible and invisible trade, Hong Kong is also the most important source of external investment in China, accounting for about two-thirds of the total. While Hong Kong's direct investment in China has been concentrated in light manufacturing industries, investment in hotels and tourist-related facilities, property and infrastructure has also been increasing. As can be expected, Guangdong occupies a highly important position in this respect. It has been estimated that, in Guangdong Province, around three million people are working for Hong Kong companies either through joint ventures or in tasks commissioned by Hong Kong companies in the form of outward processing arrangements and compensation trade. This, in effect, provides Hong Kong with a substantial production base.
Concurrently, China has also been investing heavily in Hong Kong. Its investment ranges from traditional activities like banking, import/export, wholesale/retail, and trans- portation and warehousing, to newer areas like property development, financial services, manufacturing and infrastructural projects.
Increasing financial links between Hong Kong and China are reflected by the rapid growth in financial transactions with China in recent years. While the Bank of China Group is the second largest banking group in Hong Kong, after the Hongkong Bank Group, the latter group is the best represented foreign bank in China, followed by the Standard Chartered Bank.