ENG-2020 — Page 70

The Economy

through Hong Kong, have been flourishing alongside the continued reform and opening up of the Mainland. The vibrant activities have brought significant mutual benefits to both Hong Kong and the Mainland.

With its total merchandise trade surging from US$474 billion in 2000 to US$4.7 trillion in 2020, the Mainland plays a prominent role in driving global economic growth. Hong Kong has benefited substantially from the Mainland's phenomenal external trade growth. In 2020, visible trade between Hong Kong and the Mainland was more than three times that of 20 years ago, representing growth of 6 per cent per annum in value terms (chart 4). The Mainland was the world's largest merchandise trading entity while Hong Kong ranked sixth.

Chart 4

Goods Trade between Hong Kong and Mainland

HK$ Billion

5,000

Total trade value (left scale)

4,500

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

4,000

3,500

3,000

2,500

2,000

1,500

1,000

500

Per cent

35

30

25

20

15

10

5

0

-5

-10

-15

-20

-25

2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020

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 2020. At the same time, Hong Kong was the Mainland's fourth largest trading partner in 2020 after the United States, Japan and Korea, 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 more than doubled between 2009 and 2019. The Mainland was the largest market for Hong Kong's exports of services in 2019, accounting for around 38 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 implemented from 1 June 2020. It further liberalises the Mainland market for Hong Kong's service suppliers in a

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