Chart 8
THE ECONOMY
Changing mode of Hong Kong-Mainland trade (year-on-year rate of change in real terms)
Per cent
40
Hong Kong's re-exports
35
30
25
involving the Mainland
Hong Kong's exports of
trade-related services
20
15
10
210
5
0
-5
1992 1993 1994 1995
1996
1997 1998 1999 2000 2001 2002
There has been an increasing shift in the mode of Hong Kong-Mainland trade from re-exports to offshore trade in the more recent years.
48
Hong Kong has been the largest source of external direct investment in the Mainland. The cumulative value of Hong Kong's realised direct investment in the Mainland amounted to US$205 billion at end-2002, accounting for about half of the total inward direct investment there. Over the years, there has been a noticeable shift in the composition of Hong Kong's direct investment across the boundary, from industrial processing to a wider spectrum of business ventures, such as hotels and tourist-related facilities, real estate and infrastructure development. Relative to other places in the Mainland, Hong Kong's economic links with Guangdong are the most intimate. At end-2001, the cumulative value of Hong Kong's realised direct investment in Guangdong was US$79 billion, accounting for nearly three-quarters of its total inward direct investment. Currently, over five million Chinese workers, probably many more, are said to have been employed in the province by industrial ventures with Hong Kong interests. This is about 26 times the size of Hong Kong's own manufacturing workforce.
In the opposite direction, there has been likewise a sizeable flow of investment capital from the Mainland to Hong Kong over the past years. By end-2001, the Mainland had invested a total of US$123 billion in Hong Kong, making it the largest source of external direct investment. About 2000 Mainland enterprises currently operate in Hong Kong. While these enterprises maintain high investment stakes in such traditional lines of business as the import/export trade, wholesale/retail trade, banking, transport and warehousing, their investment has increasingly diversified into other spheres such as real estate, hotels, financial services and infrastructure development.
In tandem with the upsurge in cross-boundary flows of trade, investment and people, financial links between Hong Kong and the Mainland have also been growing