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First, the importance of financial services in Hong Kong. Financial services include banking, insurance and retirement protection, financial markets and fund management services. Between them, they account for over 10% [10.8%] of Hong Kong's Gross Domestic Product in 1994, employing over 155,000 people.
The Government is committed to supporting Hong Kong's development as a major international financial centre. The Joint-Declaration stipulates that "The Hong Kong SAR will retain the status of an international financial centre, and its markets for foreign exchange, gold, securities and futures will continue. There will be free flow of capital. The Hong Kong dollar will continue to circulate and remain freely convertible." The concept is further developed in the Basic Law, and Article 109 stipulates that "The Government of the Hong Kong Special Administrative Region shall provide an appropriate economic and legal environment for the maintenance of the status of Hong Kong as an international financial centre".
The Government believes in market forces. Our economy has always been and will continue to be led by the market. We simply strive to provide an environment and the infrastructure that will be most conducive to business and commerce. We lay down the ground rules and continue to improve them in the interests of Hong Kong and in order to maintain our competitiveness vis-à-vis other financial markets. We seek to provide a level playing field for everyone. There are no restrictions for overseas investors, and similarly we do not seek to prevent local investment moving offshore.
Hong Kong's importance in the regional and international scene will continue to grow as the partnership between Hong Kong and China intensifies. Realised direct investment by Hong Kong companies in China has increased by more than 20 times in the past decade. On a cumulative basis, our realised direct investment in China is now estimated at US$60 billion, or 60% of China's total. On the other hand, direct investment in Hong Kong by China has doubled from an estimated US$10 billion at the end of 1990 to over US$20 billion at the end of 1994. the investments are predominantly in the service sectors trade-related services, hotels and tourism, real estate, banking and finance, and major infrastructural projects.
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Meanwhile, many economies in the Region are now making extra efforts to liberalise, promote and upgrade their own service sectors. While this would give rise to greater competition in the Region, liberalisation has also opened up more opportunities for trade in services. With GDP in the region projected to continue to grow strongly, at an average annual rate of around 7% to probably US$10 trillion by the year 2000; the value-added contribution of the services sector in this region can reach almost US$6 trillion. Assuming that imports of services in various economies in the Region will increase at the same pace as their GDP, the size of the regional market for imports of services can grow to over US$400 billion in the year 2000.