ENG-2008 — Page 88

48 The Economy

In addition, renminbi (RMB) business in Hong Kong continued to develop steadily in 2008. At the end of 2008, a total of 39 licensed banks were engaged in renminbi services business and outstanding renminbi deposits reached RMB56.1 billion, accounting for around 2.1 per cent of total foreign currency deposits in Hong Kong. Further to the three successful issues of renminbi bonds in 2007, there were four more issues in 2008, bringing the total amount of outstanding renminbi bonds in Hong Kong to RMB22 billion. Hong Kong is the first venue outside the Mainland to engage in the issuance of RMB bonds, reflecting the recognition of Hong Kong as China's international financial centre.

The economic co-operation and integration with the Mainland has been fostered through the Closer Economic Partnership Arrangement (CEPA). In July 2008, the Hong Kong Government and the Central People's Government (CPG) reached an agreement on liberalisation measures under the fifth phase of CEPA, introducing 29 new liberalisation measures in 17 services areas, including 15 existing CEPA services areas and two new ones. As a result, the total number of services areas covered by CEPA expanded from 38 to 40. After the outbreak of the global financial crisis in the second half of 2008, the Central Government announced 14 measures to help Hong Kong weather the global economic downturn. These include, among other things, allowing qualified enterprises to settle trade in renminbi in Hong Kong, and signing of a currency swap agreement between the People's Bank of China and the Hong Kong Monetary Authority to strengthen further co-operation between the Mainland and Hong Kong and underpin Hong Kong's status as an international financial centre.

There was also notable development in fostering even closer ties between Hong Kong and the Mainland. In September 2008, the Hong Kong and Shenzhen governments jointly announced the building of a new boundary control point at Liantang/Heung Yuen Wai. In addition, the 2008-09 Policy Address announced that the Governments of Guangdong, Hong Kong and Macao reached a consensus on funding the Hong Kong-Zhuhai-Macao Bridge. The improvement in cross-boundary infrastructure will enhance the flow of people and goods throughout the Greater Pearl River Delta and help expedite the integration of Hong Kong with its hinterland.

Hong Kong has the unique advantage of having the Mainland as its hinterland while maintaining an international outlook. With the increasing integration of the Mainland with the global economy and the urbanisation and industrialisation in the Mainland, Hong Kong's role as an international financial, trade and shipping centre will continue to strengthen. This will also help Hong Kong's development on such fronts as financial services, logistics, tourism and information services.

The Economy in 2008

External Trade

Merchandise exports displayed a trend of moderation over the course of 2008 as the external environment deteriorated. For the year as a whole, total exports of goods (comprising re-exports and domestic exports) grew by 2.9 per cent in real terms, after an increase of 8.3 per cent in 2007. The advanced economies, which