ENG-2016 — Page 69

The Economy

Economic Links between Hong Kong and Mainland

Following several decades of reform and opening up on the Mainland, cross-boundary economic ties are stronger than ever. 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 to the two places.

With its total trade surging from US$290 billion in 1996 to US$3.7 trillion in 2016, 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 2016 was about four times that of 20 years ago, representing growth of 7 per cent per annum in value terms (chart 5). In 2016, the Mainland was ranked the world's second largest merchandise trading entity and Hong Kong was ranked seventh.

Chart 5

Goods Trade between Hong Kong and 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

لسلاسيل........

35

30

25

20

15

10

5

0

-5

-10

-15

-20

-25

1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016

Merchandise trade between Hong Kong and the Mainland grew notably in the past two decades.

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 2016. On the other hand, Hong Kong is the Mainland's second largest trading partner after the US, accounting for about 8 per cent of the Mainland's total trade value in 2016. More than half of Hong Kong's exports to the Mainland in 2016, which were mainly re-exports, involved raw materials and semi-manufactures, 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 30 per cent over the past decade. The Mainland has a population of close to 1.4 billion, with over 100 million in Guangdong Province alone. That, coupled with the Central People's Government's (CPG) goal to restructure economic growth towards domestic consumption, makes the Mainland market a huge business opportunity for Hong Kong's exporters.

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