ENG-2000 — Page 77

THE ECONOMY

production (including agriculture, fisheries, mining and quarrying) is very insignificant in Hong Kong where natural resources are virtually absent.

Secondary production (comprising manufacturing, construction, and supply of electricity, gas and water), which once was a significant contributor to GDP, has dwindled in relative importance over the past two decades. To a large extent, this was attributable to the marked decrease in value-added contribution of the manufacturing sector, from 24 per cent in 1980 to 18 per cent in 1990, and further to only 6 per cent in 1999, consequential to the ongoing relocation of the more labour-intensive production processes to the Mainland. Also relevant was the rapid expansion in service activities, especially those related to the re-export and transhipment trades. As to the construction sector, its contribution to GDP likewise shrank, from 7 per cent in 1980 to 5 per cent in 1990, although it rebounded more recently to 6 per cent in 1999. By comparison, the share for the supply of electricity, gas and water held largely steady during the period, at about 3 per cent.

The open door policy and economic reforms in the Mainland have not only provided an enormous production hinterland and market outlet for Hong Kong's manufacturers, but have also generated abundant business opportunities for a wide range of its service activities. These activities include in particular freight transport, storage, telecommunications, banking, real estate development, and professional services such as legal, insurance and accounting. As a consequence, the Hong Kong economy has become increasingly service-oriented since the mid-1980s.

Reflecting this, the share of the tertiary services sector (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 GDP rose appreciably, from 67 per cent in 1980 to 74 per cent in 1990, and further to 85 per cent in 1999.

Chart 2

Gross Domestic Product by broad economic sector

1980

1999

Secondary production 31.6%

Secondary production 14.5%

Primary production 1.0%

Primary production 0.1%

Tertiary production 67.5%

Tertiary production 85.4%

The share of the tertiary services sector in GDP has been consistently on the rise over the past two decades, in parallel with a continued contraction in the share of the secondary sector.

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