ENG-2019 — Page 78

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The Economy

trade between Hong Kong and the Mainland was more than four times that of 20 years ago, representing growth of 7 per cent per annum in value terms (chart 4). The Mainland was the world's largest merchandise trading entity while Hong Kong ranked eighth.

Chart 4

Goods Trade between Hong Kong and Mainland

HK$ Billion

5,000

4,500

Total trade value (left scale)

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

4,000

3,500

3,000

Per cent

35

30

25

20

15

10

5

2,500

2,000

-5

-10

1,500

-15

1,000

-20

500

-25

1999 2001 2003

2005 2007 2009 2011

2013 2015 2017 2019

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, contributing to more than half of the city's total merchandise trade value in 2019. At the same time, Hong Kong was the Mainland's third largest trading partner in 2019 after the United States and Japan, accounting for about 6 per cent of the Mainland's total trade value. More than half of Hong Kong's exports to the Mainland, which were mainly re-exports, involved raw materials and semi-manufactures, reflecting the Mainland's role as a production hinterland and the highly integrated production network within Asia.

Meanwhile, the Mainland economy's increasing emphasis on high-quality development and greater roles for domestic consumption and services in driving economic growth have unleashed enormous demand for various services. Hong Kong, being highly competitive in many high-end services, has risen with the tide. Indeed, its exports of services to the Mainland had grown rapidly and almost tripled between 2008 and 2018. The Mainland was the largest market for Hong Kong's exports of services in 2018, accounting for more than 40 per cent of the total. The Agreement Concerning Amendment to the Mainland and Hong Kong Closer Economic Partnership Arrangement Agreement on Trade in Services was signed in November 2019 for implementation from 1 June 2020. It further liberalises the Mainland market for Hong Kong's service suppliers in a number of important sectors, including financial services, legal services, construction, testing and certification, television, motion pictures and tourism.

Hong Kong also serves as a principal gateway to and from the Mainland for tourism, business and capital. In 2019, foreign visitors made 2.7 million trips through Hong Kong to the Mainland, while Mainland residents made 44 million trips to or through Hong Kong. Hong Kong remains the largest external investor in the Mainland. According to the Mainland's statistics,

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