ENG-2008 — Page 87

The Economy | 47

and Japan), accounting for nearly 8 per cent of the Mainland's total trade value in 2008.

Hong Kong is also a principal gateway to and 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 88 per cent in the past 10 years, or at an average annual growth rate of 6.5 per cent, reaching 4.1 million trips in 2008. Correspondingly, the number of trips made by Mainland residents to, or through, Hong Kong rose by more than five times over the decade, at an average annual growth rate of 20 per cent, amounting to 16.9 million trips in 2008.

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$348 billion at the end of 2008, accounting for 41 per cent of the total inward direct investment there. Over the years, the composition of Hong Kong's direct investment in the Mainland 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 2007, the cumulative value of Hong Kong's realised direct investment in Guangdong was US$121 billion, accounting for 62 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 the end of 2007, the Mainland had invested a total of US$479 billion in Hong Kong, accounting for 41 per cent of the total external direct investment. Mainland companies also maintain a strong presence in Hong Kong. In mid-2008, 223 and 499 Mainland companies had established regional headquarters or offices, and local offices in Hong Kong respectively. All these 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 2008 with a year earlier, external claims of Hong Kong's authorised institutions to entities on the Mainland grew by 8 per cent to $463 billion.

Hong Kong is also a major funding centre for Mainland enterprises. A total of 465 Mainland enterprises were listed on Hong Kong's stock market by the end of 2008, among which 28 were listed in 2008. Reflecting the deepening crisis in the global financial market, equity capital raised through initial public offerings dropped significantly in 2008. Nevertheless, a total of 294.1 billion of equity funds was still raised by Mainland enterprises during the year. The listing and fund-raising activities further consolidated Hong Kong's position as a major fund-raising centre in the region.