ENG-1986 — Page 24

HONG KONG AS A PARTNER IN WORLD TRADE

Table 3

Hong Kong's Imports by Category in 1985

7

Total Imports

Retained Imports

Per cent

Commodity Groups

Value

Percentage

Value

Percentage

million HK$

share

million HK$

share

of total imports retained

Raw materials and

semi-manufactures

Consumer goods Capital goods

97,385

42.1

54,592

43.3

56.1

66,730

28.8

28,325

22.5

42.4

36,228

15.6

17,655

14.0

48.7

Foodstuffs

20,752

9.0

15,676

12.4

75.5

Fuels

10,324

4.5

9,902

7.8

95.9

=

Total

231,420

100.0

126,149

100.0

54.5

From this it is clear that, while Hong Kong's exports may be concentrated in a narrow range of light manufactured, mainly consumer, products, its imports cover the whole spectrum of tradeable goods, from foodstuffs and fuels through raw materials and semi-manufactures to consumer goods and capital goods. In part this stems from the very concentration of local production in a few export products. For the corollary is that the greater part of the needs of the population have to be met by imports. For instance, most consumer goods bought locally are imported, yet less than a half of total imports of consumer goods are retained in Hong Kong and the rest are re-exported. Likewise, three quarters of the food eaten is imported, as is all the fuel used and almost all capital goods, such as plant and machinery for industry and transport equipment.

Perhaps the most interesting point is that all these requirements of the local economy, even including the goods bought in large quantities by the 3.5 million tourists who visit Hong Kong each year, add up to not much more than a half of retained imports and only about a third of total imports. Almost a half of retained imports and around 40 per cent of total imports consist of raw materials and semi-manufactures used by the local manufactur- ing industry and therefore, in effect, re-exported again within the products it makes and exports. And as much as 45 per cent of total imports become re-exports proper, the entrepôt trade. Virtually all Hong Kong exports, therefore, whether domestic exports or re-exports, contain a significant proportion of imported products. In this respect, Hong Kong has all along remained true to the function it knows best, that of being a trading

economy.

This also means that the distinction between domestic exports and re-exports is not as sharp as the figures imply. The line drawn between them is nevertheless very important because it depends on the definition of Hong Kong origin, that is, those products that can be classified as made in Hong Kong by virtue of possessing sufficient Hong Kong value added or sufficient transformation. Domestic exports, as thus defined, are entitled to privileges pertaining to Hong Kong made products in overseas markets, such as GATT most favoured nation (MFN) treatment, generalised system of preferences (GSP) treatment or, in the case of textile exports, entitlement to Hong Kong quotas.

All other exports are re-exports. But, in practice, there is a spectrum of value added or transformation. There are no exports without Hong Kong content, even if it is only port charges or financing or finding markets. Other products are broken down and re-packaged for different markets or containerised and so on. Still others have some manufacturing