With continued growth in the Mainland economy and a visible pick-up in the global economy, Hong Kong was witness to a notable growth in external trade in 2004. Total merchandise trade increased by 16.4 per cent to $4,130.2 billion. Domestic exports increased by 3.5 per cent to $126 billion, while re-exports rose by 16.8 per cent to $1,893.1 billion. Imports increased by 16.9 per cent to $2,111.1 billion. The year recorded a trade deficit of $92 billion, greater than the corresponding deficit of $63.4 billion in 2003. The Appendices provide summary statistics of external trade.

In 2004, Hong Kong's largest trading partners were the Mainland of China (the Mainland), followed by the United States of America (USA) and Japan.

In 2004, Hong Kong was the world's 11th largest trading entity in terms of value of merchandise trade.

Imports

Imports of raw materials and semi-manufactures, at $805.2 billion in 2004, constituted the largest share of total imports. This was followed by consumer goods ($631.8 billion), capital goods ($565.4 billion), foodstuffs ($60.1 billion) and fuels ($48.6 billion).

In 2004, the Mainland, Japan and Taiwan were Hong Kong's major suppliers, accounting for 43.5 per cent, 12.1 per cent and 7.3 per cent of the total value of imports, respectively.

Domestic Exports

Articles of apparel and clothing accessories continued to be the largest component of domestic exports, valued at $63.4 billion or 50.3 per cent of the total value of domestic exports in 2004. At $13.1 billion, electrical machinery, apparatus and appliances, and electrical parts thereof came second. Other major export items included jewellery, goldsmiths' and silversmiths' wares, and other articles of precious or semi-precious materials; textile yarn, fabrics, made-up articles and related products; office machines and automatic data processing machines; and plastics in primary form.

In 2004, the USA, the Mainland and the United Kingdom were Hong Kong's largest markets, absorbing 30.7 per cent, 30.1 per cent and 6.5 per cent of the total value of domestic exports, respectively.

Re-exports

In 2004, principal commodities re-exported were electrical machinery, apparatus and appliances, and electrical parts thereof ($383.8 billion or 20.3 per cent of the total value of re-exports), as well as telecommunications and sound recording and reproducing apparatus and equipment ($286.6 billion or 15.1 per cent of the total value of re-exports). The Mainland, Japan and Taiwan were the main origins of the re-exports, while the Mainland, the USA and Japan were the main destinations.

The Manufacturing Sector

Innovation, technology and relocation of lower value-added operations to the Mainland have accelerated the development of more knowledge-based and higher value-added manufacturing activities, as well as manufacturing-related services or producer services. Expansion of manufacturing activities offshore since the 1980s has turned Hong Kong into a strategic control centre of an increasingly globalised production network. In spite of Hong Kong's economic restructuring, the manufacturing sector remained an important sector of the economy, providing employment to 165 300 persons (7.2 per cent of all private sector employees) in December 2004.

The printing and publishing industry was the largest employer in the manufacturing sector as at September 2004, followed by the clothing industry. Chart 1 shows the breakdown of employment within the manufacturing sector as at September 2004.

Chart 1

Number of Persons Employed by the Manufacturing Sector as

at September 2004

The manufacturing sector remains export-oriented and its excellent performance contributed to Hong Kong's ranking as one of the world's leading exporters of textiles, clothing, watches and clocks, toys and jewellery. Domestic exports amounted to $126 billion in 2004 with clothing, electronics, chemical products, jewellery and textiles being the major export items. Chart 2 shows the value breakdown of domestic exports in 2004.

Chart 2:

Value of Domestic Exports of the Manufacturing Sector in 2004

The manufacturing sector is dominated by SMEs. Of the 15 750 manufacturing establishments in 2004, 15 530 (98.6 per cent) employed fewer than 100 persons, accounting for 62 per cent of Hong Kong's total manufacturing employment. Many SMEs are linked with larger factories through an efficient and flexible sub-contracting network. This arrangement has enabled the manufacturing sector to respond swiftly to market changes.