Hong Kong's external trade has enjoyed substantial growth over the past decade. Its value has increased from $552 billion in 1986 to $2,934 billion last year. The average annual growth rate was 18 per cent. Imports are goods which are brought into Hong Kong either for local use or for subsequent re-exportation to other places. Exports of goods are designated as either domestic exports or re-exports. Domestic exports are those exports of locally produced material - the likes of natural produce (agricultural products or seafood) or manufactured goods. In the territory, our domestic exports consist mainly of manufactured goods. Re-exports are exports of goods which are not produced locally but instead have been imported first from somewhere outside the territory. For example, some goods produced in China are imported into Hong Kong and subsequently re-exported to other places. When goods are exported from here, they are regarded as Hong Kong's re-exports if they have not been submitted to a manufacturing process in the territory that has changed permanently the shape, nature, form or utility of the product. Otherwise, they would be designated as domestic exports. One of the most significant developments in Hong Kong's external trade over the past decade has been the increased prominence of re-exports. The value of Hong Kong's re-exports first surpassed that of domestic exports in 1988. In 1996, it was more than five times that of domestic exports. The breakdown of imports, domestic exports and re-exports in Hong Kong's total external trade for 1996 was 52 per cent, 7 per cent and 41 per cent, respectively. In 1986, the corresponding figures were 50 per cent, 28 per cent and 22 per cent, respectively. From 1986 to 1996, the value of Hong Kong's re-exports grew rapidly at an average annual rate of 25 per cent. Over the same period, the average annual growth-rate of Hong Kong's domestic exports was 3 per cent and that of imports 19 per cent. That Hong Kong's re-exports have flourished over the past decade has much to do with China's open-door policy which began in the late 1970s. China has been the chief destination for Hong Kong's re-exports since 1980. Last year, re-exports to China accounted for one-third of Hong Kong's total re-export trade. Apart from produce for local demand on the mainland, Hong Kong's re-exports to China comprise a significant proportion of raw materials and semi-manufactured goods for industrial processing. Many Hong Kong businessmen have set up manufacturing bases in southern China to take advantage of low labour costs and abundant land supply. After processing, a lot of the finished products are sent back to Hong Kong for re-exportation to other countries. Unlike many other official statistics, those gathered on Hong Kong's external trade are not obtained by conducting surveys. Rather, they are compiled from data contained in documents called 'trade declarations'. Anyone who imports or exports goods into or out of Hong Kong is required to submit declarations to the Government that give such details as type of goods, value, quantity, mode of transportation, and location from which goods are sent to the territory or the place to which they are bound. Statistics on external trade are among the major indicators of economic performance. They are commonly referred to in economic analyses and market-research studies. For more information on this series of articles, please write to the General Statistics Branch (2) of the Census and Statistics Department at Wanchai Tower, 12 Harbour Road, Wan Chai, Hong Kong, or call 2582 4732.