China is Hong Kong's number-one trading partner followed by the US, Japan, Germany and the UK. The close relationship between China and Hong Kong has facilitated trade in China. Geographically, Hong Kong is very close to China. Politically, Hong Kong is the Special Administrative Region, which forms part of the Mainland China.

In the last decade, Hong Kong has increased its trade and investment in China and becomes the biggest long-term investors and trading partner in China.

Hong Kong's Total Trade by Major Trading Partners, 1995 - 1998 (in US$ Million)

Major Trading Partner	1998	1997	1996	1995
The Mainland of China	133,852	143,092	134,592	126,549
United States	54,005	56,644	53,495	52,221
Japan	32,125	39,745	38,427	38,873
Taiwan	17,686	20,661	20,070	21,153
Singapore R	11,819	14,997	15,371	14,907
Germany FR	10,847	12,202	11,857	11,537
Korean R	10,595	12,164	12,308	12,174
United Kingdom	10,511	11,035	10,237	9,442
France	6,151	5,857	6,083	6,353
Malaysia	5,517	6581	6,037	5,226
Others	62,885	70,745	67,613	65,058
Total	355,992	393,723	376,090	363,493

Source: Hong Kong External Trade, Census & Statistics Departmen

Most internal companies wanting to establish and trade in China can go through Hong Kong; while China can take Hong Kong as the window for contact with the world in terms of trade, investment and technology.

Hong Kong has the necessary expertise, information and facilities to tap into the Chinese market successfully.
Hong Kong possesses the necessary market economy techniques to do business in China
With the growth of sea traffic to China, as well as increased road, air and rail links with the mainland makes Hong Kong an ideal position to trade in China.
As the major entrepot for China's trade with the world - 90% of Hong Kong's exports originate from, or are destined for, China.
China has invested US$43 billion and operated 1800 mainland enterprises in Hong Kong.
Being the gateway to China, Hong Kong accounts for 58 % of actual utilized Foreign Direct Investment in the mainland and act as a major economic source for Chinese enterprises.
Compromise with the Mainland to avoid double taxation on aviation, land transport, shipping, other business areas and personal taxation.
Domestic market expansion, favorable economic outlook, low cost of labor, improving infrastructure and the improving regulatory environment make China an attractive place to trade