ENG-2002 — Page 78

THE ECONOMY

based with a higher value-added and a greater technology content. Between 1992 and 2002, labour productivity in the local manufacturing sector, as measured by the ratio of the industrial production index to the manufacturing employment index, rose distinctly, by an annual average of about 8 per cent (Chart 6).

Chart 6

Output per person engaged in the local manufacturing sector (March 1991=100)

Index

350

300

250

200

150

100

50

0

46

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002*

Labour productivity in the local manufacturing sector has gone up substantially over the past decade.

* Average of QI to Q3 2002.

In 2002, the United States and the Mainland were the two largest markets for Hong Kong's domestic exports, both accounting for 32 per cent of the total. Other major markets included the United Kingdom (6 per cent), Taiwan (3 per cent), Germany (3) per cent), the Netherlands (3 per cent) and Japan (2 per cent). In the more recent years, more markets were developed for Hong Kong's exports, including markets in the Middle East, Eastern Europe, Latin America and Africa.

Increasing Economic Links between the HKSAR and the Mainland

Since the Mainland adopted an economic reform and open door policy in 1978, economic links between Hong Kong and the Mainland have gone from strength to strength. This has brought about substantial economic benefits to both places.

Visible trade between Hong Kong and the Mainland has expanded rapidly since 1978, at an average annual rate of 22 per cent in value terms. However, the growth rate in two-way trade moderated in the more recent years, from an average annual rate of 12 per cent in value terms during 1992–1997 to that of 4 per cent during 1997-2002, owing to increased direct shipment of goods into and out of the Mainland upon the enhanced port facilities and simplified customs procedures there. This notwithstanding, the Mainland was still Hong Kong's largest trading partner in 2002, accounting for 42 per cent of the total trade value in Hong Kong. The bulk

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