The Economy | 51
The Mainland has long been Hong Kong's largest trading partner, accounting for 45 per cent of the total trade value in Hong Kong in 2005. Ninety-one per cent of Hong Kong's re-export trade was related to the Mainland, making it the largest market for, as well as the largest source of, Hong Kong's re-exports. Reciprocally, Hong Kong was the Mainland's third largest trading partner (after the US and Japan), accounting for 10 per cent of the Mainland's total trade value in 2005.
Hong Kong is also a principal gateway to or from the Mainland for business and tourism. Between 1996 and 2005, the number of trips made by Hong Kong residents to the Mainland more than doubled, with an average annual growth rate of 9 per cent to 63 million trips. The number of trips made by foreign visitors to the Mainland through Hong Kong rose by a cumulative 77 per cent over the same period, with an average annual growth rate of 7 per cent to 4 million trips. In 2005, these two types of trips to the Mainland rose by 5 per cent and 10 per cent respectively. The number of trips made by Mainland residents to or through Hong Kong rose more than five fold, with an average annual growth rate of 20 per cent between 1996 and 2005 to 12.5 million trips. The growth moderated to 2 per cent in 2005, reflecting the slower growth in the Mainland's outbound tourism.
Hong Kong continues to be the largest external investor on the Mainland. According to the Mainland's statistics, the cumulative value of Hong Kong's realised direct investment on the Mainland reached US$260 billion at the end of 2005, accounting for 42 per cent 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, and real estate and infrastructure development. Compared to other places in the Mainland, Hong Kong's economic links with Guangdong are the closest. By the end of 2004, the cumulative value of Hong Kong's realised direct investment in Guangdong was US$100 billion, accounting for 66 per cent of its total inward direct investment.
According to a survey conducted by the Federation of Hong Kong Industries in December 2003, over 11 million Chinese workers were employed either directly or indirectly on the Mainland by industrial ventures with Hong Kong interests. This was about 62 times the size of Hong Kong's own manufacturing workforce. Within this total, about 10 million Chinese workers were employed in Guangdong. Hong Kong's huge direct investment
investment in the Mainland has contributed to the latter's industrialisation, and at the same time facilitated the rapid structural change in the Hong Kong economy.
The Mainland is likewise Hong Kong's largest source of foreign direct investment (excluding tax haven economies). By the end of 2004, the Mainland had invested a total of US$131 billion in Hong Kong, accounting for 29 per cent of the total external direct investment here. According to the Ministry of Commerce, there are over 2 400 Mainland-backed enterprises operating in Hong Kong enjoying easier access to global funding and the opportunity to extend their businesses to the overseas markets. Such investment helps boost Hong Kong's position as the regional services hub.