ENG-2013 — Page 69

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The Economy

contribution of the manufacturing sector to the economy is not large relative to the services sector, its well-established linkages with the Mainland economy have underpinned the growth of Hong Kong's services sector, especially by driving the rapid development of trading and other supporting services.

Economic Links between Hong Kong and the Mainland

Since the Mainland launched its economic reform and open-door policy in 1978, the economic relationship between the Mainland and Hong Kong has grown steadily closer. Over the years, the massive flows of goods, services, people and capital between Hong Kong and the Mainland and between the Mainland and the world through Hong Kong have yielded enormous mutual benefits and contributed to the remarkable income and employment growth in the two places.

The Mainland plays an increasingly important role in the world arena and its total trade has surged 20-fold in the past two decades. Hong Kong has benefited substantially from the Mainland's phenomenal trade growth. Visible trade between Hong Kong and the Mainland in 2013 was about five times that in 1993, representing growth of 9 per cent per annum in value terms (Chart 7). In 2013, Hong Kong and the Mainland were ranked the world's eighth and second largest trading entities respectively.

Chart 7

Visible Trade between Hong Kong and the Mainland

HK$ Billion

4,000

Total trade value (left scale)

Year-on-year rate of change (right scale)

3,500

3,000

2,500

2,000

1,500

1,000

500

Per cent

35

30

25

20

15

10

5

* 2 2 2 non on

سلسسلسل.للسيليسياسيا

-5

-10

-15

-20

-25

1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013

Merchandise trade between Hong Kong and the Mainland registered notable cumulative growth in the past two decades.

The Mainland has long been Hong Kong's largest trading partner, accounting for slightly more than half of Hong Kong's total trade value in 2013. Reciprocally, Hong Kong was the Mainland's third largest trading partner (after the European Union and the US), accounting for about 10 per cent of the Mainland's total trade value in 2013. Nearly half of Hong Kong's exports to the Mainland (mainly re-exports) in 2013 involved raw materials, reflecting the latter's role as a production hinterland and the highly integrated production network within Asia. Meanwhile, Hong Kong's exports of consumer goods (mainly re-exports) to the Mainland increased by a

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