HONG KONG: A HARD-EARNED SUCCESS
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USA with $361 billion. Japan has remained our third largest trading partner, but the United Kingdom has dropped from fourth place to eighth, while Taiwan has risen from the 14th position to fourth.
The relative decline in UK trade mirrors the trend with Europe as a whole, not surprisingly at a time when our trade with Asia in general, and China in particular, has become much more important. The share of our global trade accounted for by the 12 countries currently in the European Union has decreased from 21 per cent in 1966 to 12 per cent in 1994, while the share of countries that are now members of APEC has grown from 65 per cent to 80
per cent.
These figures illustrate the shift that has occurred in world trade, with the centre of gravity moving from the Atlantic to the Pacific as dynamic, smaller Asian economies have become wealthy consumers, and as China has opened up with its market reforms. Indications are that this trend will continue. When trade statistics are combined with the number of infrastructure and other contracts up for tender in the Asia-Pacific, one can see why increasing economic power is also clearly shifting to the region.
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Given Hong Kong's established role in international trade and our location at the cultural, trading and communications crossroads of the Pacific, we will continue to play a significant role in what is often called the Asia-Pacific Century. Our APEC membership will be valuable here because, as a leading trading and service economy, Hong Kong depends on - such relationships more than most. But we shall always ensure that the rules of the GATT/ WTO are observed, and that the latter body has our full support. APEC does not weaken that priority.
There has also been a significant shift in the composition of Hong Kong's exports from domestic exports to re-exports, in line with the re-emergence of our role as an entrepôt for the region in general and for China in particular. Accordingly, the share of domestic exports in Hong Kong's total exports fell from 76 per cent in 1966 to 19 per cent in 1994.
Underlying all these statistics is a dramatic upgrading in the level of sophistication of Hong Kong products. I remember the Chinese Manufacturers' Association annual exhibition in the late 1960s, with its very low technology exhibits cheap plastic buckets, toys and flowers, and basic textiles and garments. One must not decry such products. We were proud of them at the time. They have been the starting point for many of our most successful entrepreneurs, as well as for an important phase in the development of Hong Kong itself. But they provide a dramatic contrast with current trade promotions of up-to-the- minute fashion designs, advanced consumer electronics and other up-market goods.
The shift into services is well illustrated by the fact that the number of Hong Kong's employees in manufacturing has roughly halved since 1981, while the services sector has grown to roughly 77 per cent of GDP.
Financial Services
Turning to an area which lies at the heart of Hong Kong's recent success, the expansion of our financial services has been phenomenal. From not being featured at all on the maps denoting international financial centres in the late 1960s, we are now a leading international financial centre. We have 85 of the world's top 100 banks in Hong Kong. As many as 30 of the top 50 debt securities issuers have listed their issues here. The total number of authorised financial institutions has risen from 76 in 1966 to 380. Total deposits stand at $1,942 billion