ENG-2000 — Page 82

THE ECONOMY

accounting for 39 per cent of Hong Kong's total trade value in 2000. Also, 90 per cent of Hong Kong's re-export trade was related to the Mainland, making it the largest market for as well as the largest source of Hong Kong's re-exports. Reciprocally, Hong Kong was the Mainland's third largest trading partner in 2000 (just behind Japan and the United States), accounting for 11 per cent of the Mainland's total trade value.

Chart 7

1400

HK$ Billion

Hong Kong's visible trade with the Mainland (year-on-year rate of change in value terms)

1200

1000

800

600

400

Per cent

30

25

20

15

10

5

50

200

0

1990 1991 1992 1993 1994 1995

1995 1996 1997 1998

1999 2000

Since the Mainland adopted the open door policy and economic reforms in 1978, there has been a rapid expansion in merchandise trade, especially re-exports, between the two places.

-5

-10

Over the past two decades, there has also been a substantial increase in invisible trade and investment flows between Hong Kong and the Mainland. At present, Hong Kong is a major service centre for the Mainland generally and South China in particular, providing a wide range of professional and business support services like banking and finance, insurance, transport, accounting, sales promotion etc. It is also a principal gateway to the Mainland for business and tourism. In 2000, 50 million trips were made by Hong Kong residents to the Mainland, representing an increase of 11 per cent over 1999. Meanwhile, the number of trips made by foreign visitors to the Mainland through Hong Kong also grew markedly, by 20 per cent to three million.

Hong Kong has continued to be the largest source of external direct investment in the Mainland. According to an official data source from the Mainland, the cumulative value of Hong Kong's realised direct investment there amounted to US$171 billion at end-2000, representing nearly half of its total inward direct investment. There has been a noticeable shift in the composition of Hong Kong's direct investment across the boundary in the more recent years, from industrial processing to a wider spectrum of business ventures such as hotels and tourist-related facilities, real estate and infrastructure development. Relative to other places in the Mainland, Hong Kong's economic links with Guangdong are much more intimate.