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The Economy

Economic Links between Hong Kong and Mainland

Following several decades of reform and opening up on the Mainland, cross-boundary economic ties have been stronger than ever. Throughout the period, the flow of goods, services, people and capital between Hong Kong and the Mainland, and between the Mainland and the world through Hong Kong, have flourished and brought significant mutual benefits in the two places.

With its total trade surging from US$281 billion in 1995 to US$4.0 trillion in 2015, the Mainland plays an increasingly prominent role in the global economy and Hong Kong has benefited substantially from the Mainland's phenomenal trade growth. Visible trade between Hong Kong and the Mainland in 2015 was about four times that of 20 years ago, representing growth of 7 per cent per annum in value terms (chart 5). In 2015, the Mainland was ranked the world's largest trading entity and Hong Kong was ranked eighth.

Chart 5

Goods Trade between Hong Kong and the Mainland

HK$ Billion

4,000

Total trade value (left scale)

3,500

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

3,000

2,500

2,000

1,500

1,000

500

Per cent

1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015

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

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The Mainland has long been Hong Kong's largest trading partner. Cross-boundary trade accounted for more than half of Hong Kong's total trade value in 2015. On the other hand, Hong Kong is the Mainland's second largest trading partner after the United States, accounting for about 9 per cent of the Mainland's total trade value in 2015. More than half of Hong Kong's exports to the Mainland in 2015, which were mainly re-exports, involved raw materials, reflecting the latter's role as a production hinterland and the highly integrated production network within Asia. Also, Hong Kong's exports of consumer goods, mainly re-exports, to the Mainland increased nearly 50 per cent over the past decade. The Mainland has a population of close to 1.4 billion, with 100 million in Guangdong Province alone. That, coupled with the

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