ENG-1990 — Page 77

THE ECONOMY

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the total employed workforce rising from 16 per cent in 1971 to 19 per cent in 1981 and further to 26 per cent in 1990. This was followed by finance, insurance, real estate and business services, with its employment share rising from three per cent in 1971 to five per cent in 1981 and further to eight per cent in 1990.

Between 1980 and 1990, exports of services rose at an average annual rate of 10 per cent in real terms, while imports of services recorded a corresponding increase of 12 per cent. The major components of Hong Kong's trade in services are shipping, civil aviation, tourism and various financial services. The shares of transportation services in total exports and total imports of services were 45 and 35 per cent respectively in 1989. Travel services accounted for 39 per cent of the total value of exports of services and 44 per cent of the total value of imports of services. The corresponding shares for financial and banking services were seven per cent and four per cent respectively.

Increasing Economic Links between Hong Kong and China

Since the adoption of open-door policies by China in late 1978, Hong Kong's economic relations with China have undergone rapid growth and development.

Hong Kong and China are now each other's largest trading partner. In 1990, the total value of visible trade between Hong Kong and China amounted to $395 billion, representing an increase of 15 per cent over 1989. This growth rate was, however, significantly lower than the average annual increase of 35 per cent between 1979 and 1989. The slow-down in trade growth in 1990 was at least partly related to China's austerity programme.

Apart from being the second largest market for Hong Kong's domestic exports (accounting for 21 per cent of the total) and the largest supplier of imports into Hong Kong (accounting for 37 per cent of the total), China is particularly important in Hong Kong's re-export trade. China is the largest market for, as well as the largest supplier of, Hong Kong's re-exports. More than 80 per cent of the goods re-exported through Hong Kong are destined for, or originated from China.

In addition to trading in goods, Hong Kong also serves as an important services centre for China generally and South China in particular, including the provision of infrastructural facilities such as the port and airport, and institutional support such as financial and related business services. This is evidenced, among other things, by the increasing importance of Hong Kong as a centre for entrepôt, transhipment and other supporting activities involving China.

Hong Kong has always been a convenient gateway to China for business and tourism. In 1990, 17 million trips to China were made by Hong Kong residents, and another 1.2 million trips to China were made by foreign visitors through Hong Kong. These represented increases of 10 per cent and 18 per cent respectively over 1989.

Besides visible and invisible trade, Hong Kong is also the most important source of external investment in China, accounting for about two-thirds of the total. While Hong Kong's direct investment in China has been concentrated in light manufacturing industries, investment in hotels and tourist-related facilities and in infrastructure has also been undertaken. As can be expected, Guangdong occupies a highly important position in this respect. It has been estimated that, in Guangdong Province alone, between 1.5 and two million people are working for Hong Kong companies either through joint ventures or in tasks commissioned by Hong Kong companies in the form of outward processing