ENG-1996 — Page 82

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THE ECONOMY

processes to China since the mid-1980s, the contribution of the manufacturing sector to GDP declined steadily, from 24 per cent in 1980 to around 22 per cent during the period 1985 to 1987, 18 per cent in 1990, and further to 9 per cent in 1995. On the other hand, the share of the construction sector in GDP, having fallen from 7

per cent in 1980 to around 5 per cent in 1985, has stayed at around 5 per cent since then. The combined share of the supply of electricity, gas and water, at 2 per cent in 1995, was broadly the same as the 3 per cent level averaged over the past 10 years.

The open-door policy and economic reforms in China have not only provided a huge production hinterland for local manufacturers, they have also created an abundance of business opportunities for a wide range of service activities in Hong Kong, including freight transport, telecommunications, banking, real estate development, and professional services such as legal, accounting and insurance services. Hence, since the mid-1980s, there has been a further orientation of the Hong Kong economy towards services.

Reflecting this, the significance of the tertiary services sector as a whole (comprising the wholesale, retail and import/export trades, restaurants and hotels; transport, storage and communications; financing, insurance, real estate and business services; community, social and personal services; and ownership of premises) in terms of its contribution to GDP rose steadily, from around 67 per cent in 1980 to 70 per cent in 1985 and 74 per cent in 1990, and further to 84 per cent in 1995.

Employment by broad economic sector

Chart 3

1980

1996

Secondary production 50.1%

Secondary production 20.7%

Primary production 1.5%

Tertiary production 48.4%

Tertiary production 78.7%

Primary production

0.6%

With the on-going relocation of lower value-added and less skill-intensive manufacturing processes to China and steady expansion of service sector activities in Hong Kong, the tertiary services sector has overtaken the secondary production sector to become the largest employer in the economy.

The increasing orientation of the Hong Kong economy towards services was also evident in employment. The share of the tertiary services sector as a whole increased