THE ECONOMY
was 8 per cent.) Domestic exports fell by about 8 per cent both in value terms and in real terms in 1996.
Re-exports to China for meeting its own demand rose further in 1996 albeit it at a slower rate than in 1995. The moderation, amid a continued strong growth in retail sales in China, probably reflected an increasing shift in the pattern of consumer spending from consumer goods to consumer services, as well as from imports to locally produced goods. However, re-exports to China for outward processing purposes were slack, affected by the slow-down in import demand in the US market, the cut in value-added tax rebate on export items by the Chinese government, and the increasing trend towards direct shipment and transshipment from ports in China. There was, nevertheless, a significant rebound in the third quarter. Taken together, growth in re-exports to China eased to 12 per cent in real terms in 1996, from a 15 per cent increase in 1995.
Re-exports to the USA grew only modestly
by 4 per cent in real terms in 1996 — with a decline of 3 per cent in the first half of the year and an increase of 10 per cent in the second half. Indeed, USA imports from many sources in East Asia and the European Union also slowed down over the course of 1996. Nevertheless, Hong Kong's re-exports to Japan and the United Kingdom remained robust, rising by 15 per cent and 13 per cent respectively in real terms in 1996. Re-exports to Germany showed a steady growth of 2 per cent in real terms in 1996, compared with 6 per cent in 1995. China remained the largest supplier of Hong Kong's re-exports, followed by Japan, Taiwan, the USA and the Republic of Korea.
Analysed by end-use category, consumer goods, and raw materials and semi- manufactures remained the two largest categories in Hong Kong's re-exports, with respective shares of 48 per cent and 29 per cent of the total value in 1996. Re-exports of tobacco manufactures, cameras, flashlight apparatus and supplies for photography, cotton yarn and thread, and paper and paperboard registered faster increases than re-exports of other commodity items.
In the first three quarters of 1996, seaborne outward transshipment fell by 5 per cent in tonnage terms over a year earlier, representing a consolidation after the upsurge of 30 per cent in 1995. The decline was concentrated mainly in transshipment flows originating from North China, as enhancement in port infrastructure in places such as Shanghai and Tianjin reduced the need to transship through Hong Kong. A slow-down in this stream of transshipment probably entailed less adverse impact on value-added and income for Hong Kong, unlike transshipment flows in South China which were more of an outward processing nature. Analysed by market, transshipment to Japan, Taiwan, China and the USA rose by 11 per cent, 11 per cent, 6 per cent and 4 per cent, respectively, in tonnage terms in the first three quarters of 1996 over a year earlier. On the other hand, transshipment to Germany, and the UK fell, by 19 per cent and 20 per cent, respectively. Manufactured goods continued to account for the largest share of seaborne outward transshipment, followed by chemicals and related products, crude materials, foodstuffs, and machinery and transport equipment.
Affected by the same factors that influenced re-export growth, domestic exports to most of the major markets showed weaker performance in 1996 than in 1995. For the year as a whole, domestic exports to Singapore, the USA, Germany, the UK, China and Japan all fell in real terms by 17 per cent, 13 per cent, 7 per cent, 4 per cent, 3 per
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