ENG-1993 — Page 77

THE ECONOMY

and development in finance and business services, including banking, insurance, real estate, and a wide range of other professional services.

Entrepôt trade re-emerged prominently in the late 1970s, as China embarked on its 'open door' policies to facilitate its modernisation programmes. Rapid economic growth in the Asia-Pacific region over the past decade provided an added stimulus. Hong Kong, with 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 in general, and China in particular, increased rapidly. Re-export trade thus showed a significant increase, with an average annual growth rate of 26.6 per cent in real terms during 1984 to 1993.

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, convenience stores and modern shopping centres have become in- creasingly popular. This development has been reinforced by the rapid growth in tourism. Restaurants and hotels have also experienced a substantial increase in business. With higher household incomes, there has been a growing demand for services of a better quality and services in the community, social and recreational fields have also grown substantially.

Analysed by sectors, the contribution to the GDP of the wholesale, retail and import/ export trades, restaurants and hotels varied between 19 and 21 per cent from 1970 to 1983, before rising to 27 per cent in 1992. The contribution to the GDP of the transport, storage and communications group was stable at around seven to eight per cent, before rising to nine per cent for the period 1987 to 1991, and further to 10 per cent in 1992. The contribution of finance, insurance, real estate and business services to the GDP experienced considerable fluctuations. It rose from 15 per cent in 1970 to 24 per cent in 1981, but fell back to 16 per cent in 1984, mainly reflecting the slump in the property market. It rose steadily in the following years, to 24 per cent in 1992.

Within the services sector, the most notable increase in employment was in the wholesale, retail and import/export trades, restaurants and hotels field. The largest employer in the services sector, its share of the total employed workforce rose from 16 per cent in 1971 to 19 per cent in 1981 and further, to 28 per cent, in 1993. This was followed by finance, insurance, real estate and business services, where the employment share rose from three per cent in 1971 to five per cent in 1981 and further, to nine per cent, in 1993.

Between 1983 and 1993, exports of services rose at an average annual rate of nine per cent in real terms, while imports of services were higher at 10 per cent per annum. 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 per cent and 33 per cent, respectively, in 1992. Travel services accounted for 35 per cent of the total value of exports of services and 46 per cent of the total value of imports of services. The corresponding shares for financial and banking services in total exports and total imports of services were six per cent and three 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. The two are each other's major trading partners.

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