3
The Economy
reflecting the latter's role as a production hinterland and the highly integrated production network within Asia. On the other hand, as the Mainland economy evolves from high-speed to high-quality development with domestic consumption and services playing greater roles in driving economic growth, enormous demand has been unleashed for various services. Hong Kong, being highly competitive in various high-end services, rose with the tide. Indeed, Hong Kong's exports of services to the Mainland have seen rapid growth, more than tripling from 2007 to 2016. By 2016, the Mainland was the largest market for Hong Kong's exports of services, accounting for some 40 per cent of the total value.
Chart 5
Goods Trade between Hong Kong and Mainland
HK$ Billion
4,500
Per cent
35
Total trade value (left scale)
30
4,000
➡Year-on-year rate of change (right scale)
25
3,500
20
15
3,000
10
2,500
5
0
2,000
-5
1,500
-10
-15
1,000
-20
500
-25
1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 2017
Merchandise trade between Hong Kong and the Mainland grew notably in the past two decades.
Hong Kong also serves as a principal gateway to and from the Mainland for business and tourism. In 2017, foreign visitors to the Mainland made 3.3 million trips through Hong Kong, while the number of trips made by Mainland residents to or through Hong Kong grew 3.9 per cent to 44.4 million. Hong Kong remains 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 exceeded US$1 trillion as at end-2017, accounting for more than half of the total.
Reciprocally, Hong Kong is the first port of call for the Mainland's outward direct investment. Based on the Mainland's statistics, the Mainland's stock of outward direct investment to Hong Kong accounted for 58 per cent of its total outward direct investment as at end-2016, reflecting Hong Kong's role as a platform for Mainland companies to explore other markets and go global. Based on Hong Kong's statistics, the Mainland is Hong Kong's second largest source of foreign direct investment, accounting for 26 per cent of Hong Kong's total inward direct investment. Mainland companies also maintain a strong presence in Hong Kong. As at mid-2017, Mainland companies had established 1,264 regional headquarters and regional or local offices in Hong Kong, up from 725 a decade ago.
Due to proximity, Guangdong's economic links with Hong Kong are understandably the closest among all the provinces. Based on the Mainland's statistics, the cumulative value of Hong
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