ENG-2012 — Page 66

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The Economy

cross-territory fund flows, Hong Kong's external financial assets and liabilities were also substantial, at $27,138 billion and $21,463 billion respectively at the end of 2012. The corresponding ratios to GDP in 2012 were 1,330 per cent and 1,052 per cent. Reflecting Hong Kong's robust international investment position, its net external financial assets amounted to $5,675 billion at the end of 2012, equivalent to 278 per cent of GDP.

The Gross National Income (GNI), comprising GDP and net external primary income flows, stood at $2,084 billion in 2012. This was higher than the corresponding GDP by 2 per cent. The difference represented a net inflow of external primary income. In gross terms, inflows and outflows of external primary income remained substantial in 2012, at $1,069 billion and $1,026 billion respectively, equivalent to 52 per cent and 50 per cent of GDP respectively. This was attributable to the huge volumes of Hong Kong's inward and outward investment.

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, as the city is a predominantly urban economy.

Secondary production (comprising manufacturing, construction, and supply of electricity, gas and water), which had a significant direct value-added contribution to the economy in the early 1980s, has since diminished in relative importance. Within this broad sector, the value-added contribution from manufacturing shrank from 14 per cent in 1991 to 4 per cent in 2001 and to only 2 per cent in 2011. The construction sector's contribution to GDP stayed at around 5 per cent between 1990 and 2000, before edging down to 3 per cent in 2011. The supply of electricity, gas and water held relatively stable, with a share of around 2-3 per cent of GDP over the past two decades.

The Hong Kong economy has become increasingly service-oriented since the 1980s. The Mainland's open-door policy and economic reforms have not only provided a vast production hinterland and market outlet for Hong Kong's manufacturers but, more importantly, also unleashed ample business opportunities for a wide range of service providers, Hong Kong has thus leveraged its geographical proximity and cultural ties with the Mainland as well as its strong market institutions to re-orientate itself towards service activities and move up the value chain.

As a result, the share in GDP of the tertiary sector (comprising the import/export, wholesale and retail trades; accommodation and food services; transportation, storage, postal and courier services; information and communications; financing and insurance; real estate, professional and business services; public administration, social and personal services; and ownership of premises) rose progressively over the years, to 93 per cent in 2011 (Chart 3). Development on the employment front was similar. Over the past two decades, the tertiary sector employed significantly more workers while the share of employment in secondary production continued to shrink (Chart 4).

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