THE ECONOMY
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The other three state-owned commercial banks, namely the China Construction Bank, the Agricultural Bank of China, and the Industrial and Commercial Bank of China, were all granted banking licences to operate in Hong Kong in 1995. Meanwhile, the HSBC Group, the Bank of East Asia and the Standard Chartered Bank continue to be amongst the best-represented foreign banks in the Mainland.
Hong Kong has been serving as a major funding centre for the Mainland. Apart from being a direct source of funds, it also renders a window through which foreign funds can be channelled efficiently into the Mainland for financing development projects there. So far, most of the Mainland's fund-raising activities in Hong Kong have taken the form of syndicated loans. But more recently, an increasing number of Mainland-related banks and enterprises have raised funds through issuance of negotiable certificates of deposit, bonds and shares. Since mid-1993, H shares have been listed on Hong Kong's stock exchange by an increasing number of large state- owned enterprises (SOEs) in the Mainland. At end-2001, a total of 50 SOEs were so listed in the Main Board of the Hong Kong Stock Exchange, raising a total equity capital of $127 billion. Of these 50 enterprises, three were listed in 2001, raising $6.1 billion. Another eight SOEs and one non-SOE were listed in the Growth Enterprise Market (GEM) set up in November 1999, raising a total equity capital of $1.8 billion. With continuing reform and further liberalisation of the Mainland economy, particularly upon China's entry into the World Trade Organisation, more foreign investment can be expected to flow into the Mainland. Hong Kong's role as a major funding and services centre for the Mainland will hence be sustained in the years to
come.
The Economy in 2001
External Trade
The global economic environment showed a distinct worsening during 2001, prompted by the abrupt downturn in the US economy and with the slack spreading over to Asia and Europe. The shock impact of the tragic events in the United States on September 11 aggravated the situation. Amidst a synchronised downturn, the world economy grew by just around 2 per cent in real terms in 2001, the slowest in the past eight years. It also contrasted markedly with the robust growth of 5 per cent in 2000. As the setback intensified, import demand in almost all of the major markets receded, with a decrease starting to emerge in the second quarter and enlarged appreciably in the latter part of the year.
Under such an austere global economic environment, Hong Kong's merchandise exports slackened visibly over the course of 2001. Nevertheless, with exports to the Mainland still holding up better than those to the other major markets, this helped cushion the blow to Hong Kong's total export trade. Also, with a lower concentration on electronic products, the impact of the global electronic product slump on Hong Kong's overall export performance had been less severe.
For 2001 as whole, total exports of goods (comprising re-exports and domestic exports) contracted by 3 per cent in real terms, in stark contrast to the highly robust growth of 17.1 per cent in 2000. On a year-on-year comparison, total exports of goods, which had recorded only a modest growth of 4.2 per cent in real terms in the first quarter of 2001, fell by 1.9 per cent in the second quarter. The decrease then widened to 4 per cent in the third quarter, and further to 8.8 per cent in the fourth
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