ENG-1990 — Page 76

THE ECONOMY

telecommunications and sound recording and reproducing equipment, electrical machinery and appliances, and office machines and data processing equipment. The combined share of these three commodity groups in the total value of domestic exports rose from 16 per cent in 1979 to 22 per cent in 1990.

Market diversification is the combined result of the initiatives taken by local manufacturers and exporters, and promotion efforts financed by the government. Since the late 1950s, the United States has been the largest market for Hong Kong's domestic exports, in place of the United Kingdom. Gradually, the share of domestic exports going to such countries as Germany, Japan, Canada and Australia, and to the South-east Asian economies has also increased. In recent years, China has become the second-largest market for Hong Kong's domestic exports. In addition, Hong Kong has diversified into other new markets, including countries in the Middle East, Eastern Europe, Latin America and Africa.

The Service Sectors

Over the past decades, the rapid growth in external trade has not only enabled Hong Kong to build up a strong manufacturing base, it has also provided the underlying conditions for the service sectors to flourish and diversify. Of particular note was the rapid growth and development in finance and business services, including banking, insurance, real estate and a wide range of other professional services.

The significance of entrepôt trade re-emerged in the late 1970s as China adopted open-door economic policies to facilitate its modernisation programmes. Rapid economic growth in the Asia-Pacific region over the past decade provided an added stimulus. Hong Kong, helped by its strategic location and well-established transport and communications network, was in a favourable position to take advantage of these opportunities. Trading and other economic links between Hong Kong and the region generally, and China in particular, increased rapidly.

Over the years, Hong Kong has developed an efficient wholesale and retail network to cater for the growing consumption needs of a more affluent population. Supermarkets, large department stores and modern shopping centres have become increasingly popular. The rapid growth in tourism has reinforced this development. Restaurants and hotels have also experienced a substantial increase in business. Furthermore, with increased household incomes, there has been a growing demand for services of a better quality to meet the rising standard of living. Thus services in the community, social and recreational fields have also grown substantially.

Analysed by sectors, the contribution of the wholesale, retail and import/export trades, restaurants and hotels to the GDP varied between 19 and 21 per cent in 1970 to 1983, before rising to 24 per cent in 1989. The contribution of the transport, storage and communications sector to the GDP was stable at around seven to eight per cent, before rising to nine per cent in 1987 to 1989. The contribution of the finance, insurance, real estate and business services sector to the GDP experienced considerable fluctuation, however. It rose from 15 per cent in 1970 to 24 per cent in 1981, but fell to 16 per cent in 1984, mainly reflecting the slump in the property market. The contribution of this sector to the GDP then rose steadily, to 20 per cent in 1989.

Within the service sectors, the most notable increase in employment was in the wholesale, retail and import/export trades, restaurants and hotels sector, with its share in

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