ENG-2007 — Page 88

48 The Economy

Hong Kong is also a principal gateway to, or from, the Mainland for business and tourism. The number of trips made by foreign visitors to the Mainland through Hong Kong rose by a cumulative 90 per cent in the past 10 years, or at an average annual growth rate of 6.6

of 6.6 per cent, reaching 4.4 million trips in 2007. Correspondingly, the number of trips made by Mainland residents to, or through, Hong Kong rose by almost six times, at an average annual growth rate of 21 per cent, amounting to 15.5 million trips in 2007.

Hong Kong continues to be the largest external investor in the Mainland. According to the Mainland's statistics, the cumulative value of Hong Kong's realised direct investment in the Mainland reached US$307 billion at end-2007, accounting for 40 per cent of the total inward direct investment there. Over the years, the composition of Hong Kong's direct investment in the Mainland had shifted gradually from industrial processing to a wider spectrum of business ventures, such as hotels and other tourism-related facilities, real estate and infrastructure development. Hong Kong has closer economic links with Guangdong than other places on the Mainland. By the end of 2006, the cumulative value of Hong Kong's realised direct investment in Guangdong was US$112 billion, accounting for 63 per cent of its total inward direct investment.

Hong Kong's huge direct investment in the Mainland has contributed to the latter's industrialisation and, at the same time, facilitated the rapid structural change in the Hong Kong economy.

The Mainland is likewise Hong Kong's largest source of foreign direct investment. By end-2006, the Mainland had invested a total of US$260 billion in Hong Kong, accounting for 35 per cent of the total external direct investment. Mainland companies also maintain a strong presence in Hong Kong. In mid-2007, 245 and 480 Mainland companies had established regional headquarters or offices, and local offices in Hong Kong respectively. All these have reflected Hong Kong's position as the regional services hub.

In tandem with the surge in cross-boundary business activities, financial links between Hong Kong and the Mainland have strengthened substantially over the years. Comparing end-December 2007 with a year earlier, external liabilities of Hong Kong's authorised institutions to entities on the Mainland grew by 71 per cent to $817 billion, and their external claims on entities on the Mainland also grew by 23 per cent to $429 billion.

Hong Kong is also a major funding centre for Mainland enterprises. A total of 439 Mainland enterprises were listed on Hong Kong's stock market by the end of 2007. Among them, 55 were listed in 2007, raising equity capital of $371.2 billion, a sizable sum despite the lack of mega initial public offering likewise of the Industrial