ENG-1986 — Page 68

46

THE ECONOMY

Between 1973 and 1984, the value of net output by the manufacturing sector grew at an average annual rate of 18 per cent, while manufacturing employment grew at an average annual rate of four per cent. Within the manufacturing sector, the most significant change occurred in the textiles industry. The share of this industry in the net output of manufacturing declined from 27 per cent to 14 per cent, and its share in manufacturing employment from 21 per cent to 12 per cent, over the period. This decline was offset by the expansion of the clothing, electrical products and electronics, and professional and scientific equipment (including watches and clocks) industries. Between 1973 and 1984, their shares of the net output in manufacturing increased from 20 per cent to 24 per cent, from nine per cent to 18 per cent, and from one per cent to four per cent respectively, while their shares in manufacturing employment increased from 26 per cent to 31 per cent, from 11 per cent to 15 per cent, and from two per cent to four per cent respectively.

Domestic exports in 1986 consisted principally of wearing apparel and clothing accesso- ries (34 per cent of the total value), electronics (22 per cent), plastic products (eight per cent), watches and clocks (eight per cent), textiles (seven per cent), electrical household appliances (three per cent), and metal products (three per cent). In terms of domestic export shares, the most significant changes in the past ten years had been the decline in the relative importance of clothing (from 44 per cent in 1976 to 34 per cent in 1986) and of textiles (from nine per cent in 1976 to seven per cent in 1986), and the increase in the relative importance of electronics (from 13 per cent in 1976 to 22 per cent in 1986) and of watches and clocks (from four per cent in 1976 to eight per cent in 1986).

Market diversification, partly as a result of the promotion efforts financed by the government, has long ended the predominance of the United Kingdom and the Common- wealth countries as Hong Kong's main export markets. Since the establishment of the 'Certificate of Origin' system in the late 1950s, the United States has become Hong Kong's largest export market. Gradually, the share of domestic exports going to other countries such as the Federal Republic of Germany, Japan, Canada, Australia and those in Southeast Asia has also increased. In recent years, Hong Kong has diversified further into new markets, particularly China, which is now the second largest market for Hong Kong's domestic exports, and also countries in the Middle East, Eastern Europe, Latin America and Africa.

Nature and Relative Importance of the Financial Sector

The favourable geographical position of Hong Kong, which provides a bridge in the time gap between North America and Europe, together with the strong links with China and the South East Asian countries and assisted by excellent communications with the rest of the world, has helped to develop Hong Kong into one of the world's leading international financial centres. Banks and deposit-taking companies, insurance companies, pension funds, unit trusts and similar operations, foreign exchange and money brokers, stock and commodity brokers, other financial organisations and ancillaries, such as international firms of lawyers and of accountants, combine to provide a wide range of financial and related services in Hong Kong to both local and international customers.

Under the three-tier structure established since 1981, deposit-taking institutions in Hong Kong are classified into three separate groups, namely licensed banks, licensed deposit- taking companies and registered deposit-taking companies.

Banking licences are granted at the discretion of the Governor in Council in accordance with the provisions of the Banking Ordinance. At present, a domestic company (that is, a company incorporated in Hong Kong and predominantly beneficially owned by Hong