ENG-2004 — Page 82

52 The Economy

Among them, 44 were listed in 2004, raising equity capital of $75.4 billion. These listings have helped broaden the base of Hong Kong's stock market and entrench further Hong Kong's position as a major fund raising centre in the region.

The implementation of CEPA on January 1, 2004 and its continued improvement and development further expand business opportunities between Hong Kong and the Mainland by enlarging the scope for cross-boundary trade, services and investment. Under CEPA, the Mainland has accorded zero tariff for exports from Hong Kong in 1 108 Mainland product codes (379 items from January 1, 2004 under the first phase of CEPA; 540 items with current production from January 1, 2005 and 189 new items. upon production under the second phase of CEPA). On services, Hong Kong companies will be allowed to have earlier entry and wider market access, as well as to form wholly owned or majority-owned subsidiaries in 26 service sectors in the Mainland. CEPA also facilitates trade and investment between Hong Kong and the Mainland through promoting cooperation in customs clearance, electronic commerce, transparency in laws and regulations and other procedures.

With continuing reform and further liberalisation of the Mainland economy, particularly after China's entry into the World Trade Organisation, more foreign investment can be expected to flow into the Mainland. Hong Kong's service hub role for the Mainland will continue to strengthen. Hong Kong possesses a strong niche in partnering with as well as in providing various business support services to foreign enterprises seeking to enter the Mainland market. In the other direction, as more Mainland enterprises seek to extend their business outward, Hong Kong can also help them to gain access to the overseas markets.

The Economy in 2004

External Trade

Hong Kong's external trade had another year of impressive performance in 2004. Apart from buoyant global and regional demand, continued weakness of the US dollar rendered a further boost to Hong Kong's external competitiveness. Total exports of goods (comprising re-exports and domestic exports) leaped by 15.3 per cent in real terms in 2004, up even further from the already strong growth of 14 per cent in 2003. There were double-digit increases in all four quarters of the year, and by the fourth quarter of 2004, total exports had sustained double-digit growth for five straight quarters. On a seasonally adjusted quarter-to-quarter comparison, total exports of goods rose strongly during the first two quarters of 2004, settled back somewhat in the third quarter, before bouncing back strongly in the fourth quarter.

Re-exports continued to outperform overall export growth, surging by a further 16.3 per cent in 2004, following 16.1 per cent increase in 2003. Benefitting from the Mainland's buoyant trade flows in the year, and also reflecting Hong Kong's prominent role as the trade conduit between the Mainland and the rest of the world, Hong Kong's re-export trade involving the Mainland was robust throughout 2004.