ENG-2004 — Page 71

The Economy | 45

of GDP. Gross external debt, which is the sum of the non-equity liability components in international investment, stood at $3,366 billion at end-2004, equivalent to 265 per cent of GDP. The major proportion of it arose from normal operations of the banking sector.

The Gross National Product (GNP), comprising GDP and net external factor income flows, stood at $1,300 billion in 2004. This was higher than the corresponding GDP by 2.4 per cent, owing to sustained net inflow of external factor income. In gross terms, inflows and outflows of external factor income remained substantial in 2004, at $395 billion and $365 billion respectively, equivalent to 31 per cent and 29 per cent of GDP. This was related to the huge volume of both inward and outward investment in Hong Kong.

Contributions of the Various Economic Sectors

Primary production (including agriculture, fisheries, mining and quarrying) is insignificant in Hong Kong, in terms of both value-added contribution to GDP and share in total employment. This reflects the predominantly urbanised nature of the

economy.

Secondary production (manufacturing, construction, and supply of electricity, gas and water), which constituted a significant contributor to GDP up to the early 1980s, has since diminished in relative importance. Within this broad sector, the value-added contribution from manufacturing shrank from 23 per cent in 1983 to 11 per cent in 1993 and distinctly more to only 4 per cent in 2003, consequential to ongoing relocation of the more labour-intensive production processes to the Mainland. For the construction sector, its contribution to GDP edged lower from 6 per cent in 1983 to 5 per cent in 1993, and further to 4 per cent in 2003. As to supply of electricity, gas and water, the corresponding share held relatively stable, at around 2-3 per cent over the past two decades.

The open door policy and economic reform in the Mainland have not only provided an enormous production hinterland and market outlet for Hong Kong's manufacturers, but also created abundant business opportunities for a wide range of service activities. These activities include specifically freight and passenger transport, travel and tourism, telecommunications, banking, insurance, real estate, and professional services such as financial, legal, accounting and consultancy services. In consequence, the Hong Kong economy has become increasingly service-oriented since the 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; finance, insurance, real estate and

estate and business services; community, social and personal services; and ownership of premises) in GDP went up visibly, from 67 per cent in 1983 to 81 per cent in 1993 and further to 88 per cent in 2003 (Chart 2).