ENG-1971 — Page 44

2

Industry and Trade

DESPITE increasing protectionist action in some of Hong Kong's major markets against the Colony's principal industrial export, textiles, both the industrial and commercial sectors of the economy continued to expand in 1971. The rate of expansion in domestic exports was not as spectacular as that of recent years and eased off to 11 per cent. This compares with 17.4 per cent in 1970 and an average annual growth rate of 13.8 per cent during the decade. Although the current trend indicates a general slowing down in the growth rate due in part, no doubt, to recent international monetary and trade problems-it is still indicative of the fact that Hong Kong can continue to compete efficiently in world markets and record significant increases in its exports on an ever increasing base figure. There is confidence that Hong Kong's external trade will continue to expand in 1972, although perhaps at a less rapid pace than in the past two or three years.

Hong Kong's economy is to a large extent dependent upon export-oriented light manufacturing industries and a myriad of servicing industries operating within a free port, free enterprise environment. The industries which have developed in scope, scale and sophistication are those whose products have been able to with- stand international competition without subsidy or protection, and those which are geared to servicing the manufacture of such products. Highly developed banking, insurance and shipping systems inherited from the historical entrepôt era have facilitated and promoted the development of manufacturing industries which are today the main- stay of Hong Kong's economy.

Preservation of a liberal import regime and a reluctance to meet demands for protection of particular industries or to retaliate against other countries' restrictive actions are key elements in the Govern- ment's commercial policy. Hong Kong has therefore remained true to the traditions established when it was an entrepôt, with no tariffs and few restrictions on the import of commercial goods.

The General Agreement on Tariffs and Trade, of which Hong Kong is treated as a member by virtue of the United Kingdom's