ENG-2013 — Page 65

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The Economy

The corresponding figures for Hong Kong's stock of outward direct investment were likewise huge, at $10,485 billion or 494 per cent of GDP. As an international financial centre with huge cross-territory fund flows, Hong Kong's external financial assets and liabilities were also substantial, at $29,087 billion and $23,136 billion respectively at the end of 2013. The corresponding ratios to GDP in 2013 were 1,370 per cent and 1,090 per cent. Reflecting Hong Kong's robust international investment position, its net external financial assets amounted to $5,951 billion at the end of 2013, equivalent to 280 per cent of GDP.

The Gross National Income (GNI), comprising GDP and net external primary income flows, stood at $2,165 billion in 2013. 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 2013, at $1,128 billion and $1,086 billion respectively, equivalent to 53 per cent and 51 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 Hong Kong is a predominantly city 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 13 per cent in 1992 to 4 per cent in 2002 and to less than 2 per cent in 2012. The construction sector's contribution to GDP stayed at around 5 per cent between 1990 and 2000, and then fell to about 3 per cent in the late 2000s, before edging up to 4 per cent in 2012. 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 2012 (Chart 3). Development on the employment front was similar, with the tertiary sector's share of employment increasing visibly while that in secondary production continued to shrink over the past two decades (Chart 4).

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