LET'S SET THE scene here. We once had a big manufacturing sector in Hong Kong. It accounted for more than 20 per cent of gross domestic product and its domestic exports alone were the equivalent of more than 50 per cent of GDP.

But a good number of manufacturers did not know as much about the overseas markets for their wares as they did about producing them.

Enter the government-sponsored Trade Development Council. It put them in touch with customers abroad and provided a worthwhile service to the economy.

But then the manufacturers moved across the border and the TDC had a vacuum to fill in order to justify its continued existence.

It could do little to assist our rising services economy. It cannot teach bankers to bank or shippers to ship and tourism is the bailiwick of another agency. Thus the TDC resorted mostly to organising trade exhibitions, even if the goods are not made in Hong Kong.

You might think this a weak justification for its continued existence and I certainly do. We have had to build the necessary exhibition facilities at great public cost and I cannot imagine setting up a new agency now to support our much fewer merchandise exporters if there had not been one before.

But the TDC makes three arguments for itself. The first is that there are still manufacturing links to Hong Kong because many of the companies that moved to the mainland are headquartered in Hong Kong.

The second is that these companies rely heavily on export/import trade services in Hong Kong.

These, along with residual manufacturing in Hong Kong, still account for about 25 per cent of our GDP, although the balance between them is now heavily skewed to the trading element, as the chart shows.

The third argument is that manufacturing and trading contribute much more to GDP than officially stated. They provide business to other service industries and the people employed in them boost the rest of the economy when they spend their earnings on further investment or daily necessities.

This, boiled down, is the substance of the report the TDC has just published. The studies were independently conducted but do not fool yourself. It is entirely a self-serving report. The TDC wants to justify its existence.

Its three arguments, however, do not really hold water. Yes, it is true that many manufacturers in the mainland still have links to Hong Kong. What do these bring us?

Not jobs and investment. These have now gone to the mainland. All we really get is repatriated investment earnings that may come back here but, then again, may not. The link with Hong Kong is much weakened.

We get the headquarters, admittedly, along with the headquarters jobs. This brings us to the TDC's second argument, the value of all those trading services.

But the TDC cannot do much to assist headquarters personnel. Not only are these people invariably better acquainted now with their overseas markets but we are talking mostly of jobs in design, marketing, shipping, finance and management.

In few or none of these fields can the TDC boast more expertise than those involved. It may try to give itself an edge, in design for instance, but it runs into immediate difficulty because design is so very product specific.

All it can really do is promote their wares at exhibitions, which would be fine if it were a private promoter that relied only on the fees it charges.

It lives on public money, however, both in annual subsidies and in massive public investment that it is not required to pay off.

Why not ask Beijing then to pay the bill when the goods promoted are really mainland ones?

As to the third argument, we have something entirely specious.

Yes, the manufacturing labourer who spends his wage boosts another sector of the economy. So does the construction worker who spends his wage. All spending of any sort does this.

If the TDC then wants to claim that this doubles the size of manufacturing's contribution to the economy, well, it does so for the construction sector and for every other sector. Double the size of the entire economy then and the proportion contributed by manufacturing stays just what it was before.

I still say the TDC has passed its sell-by date.