ENG-1996 — Page 86

THE ECONOMY

manufacturing employment fell at an average annual rate of 5 per cent. Even after taking into account the effect of price increases on the output value, labour productivity improved significantly.

Chart 6

Index

250

200

150

100

50

0

Output per employee in the manufacturing sector (March 1991 = 100)

1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996*

Output per employee in the manufacturing sector has been on a general uptrend over the years.

Average of Q1 to Q3 1996 only

54

China has become the largest market for Hong Kong's domestic exports, accounting for about 29 per cent of domestic exports in 1996. The importance of other economies in the Asia-Pacific region as a market for Hong Kong's exports has also risen steadily over the years. Hong Kong's exports have also diversified into new markets, including countries in the Middle East, Eastern Europe, Latin America and Africa.

Increasing Economic Links between Hong Kong and China

Economic links between Hong Kong and China have grown from strength to strength, since China adopted economic reform and open-door policy in 1978. This has brought about substantial economic benefits to both places.

Specifically, visible trade between Hong Kong and China has grown strongly since 1978, at an average annual rate of 29 per cent. In 1996, the two-way trade grew further, albeit only moderately, by 6 per cent. Growth performance varied among the main trade aggregates. While imports from China and re-exports to China were up by 6 per cent and 9 per cent respectively in 1996, domestic exports to China recorded a decrease of 3 per cent. Nevertheless, as the pace of growth in Hong Kong's visible trade with other overseas economies also decelerated, China still accounted for 36 per cent, the largest share in Hong Kong's total trade and hence remained Hong Kong's