The opening up of China's economy in the '80s created new opportunities for trade between Hong Kong and the mainland. Total trade between the two places increased at an average annual rate of 26 per cent in value terms between 1978 and 1998. 'Total trade' refers to all movements of merchandise between Hong Kong and the mainland. It includes imports, domestic exports and re-exports. The latter two are referred to collectively as 'total exports'. Hong Kong is a free port where goods can enter and leave freely without Customs clearance. Nevertheless, people who import and export goods are required by law to submit trade declarations to the Customs and Excise Department within 14 days after the importation or exportation of goods. The trade declara tions are then forwarded to the Census and Statistics De partment for the processing and compila tion of trade statistics. Trade declarations are a useful way to collect trade data in Hong Kong. External trade statistics are compiled using this information. Import/export declarations are also required for Hong Kong's trade with the mainland, and statistics relating to this are included in Hong Kong's external trade statistics. Along with its economic reform, the mainland has emerged as a favourite offshore investment destination for Hong Kong entrepreneurs and manufacturers in view of its geographical proximity and availability of low-cost labour and land. An increasing number of firms in Hong Kong have relocated their manufacturing bases across the border. This results in massive movements of raw materials and semi-finished goods from Hong Kong to the mainland for processing and subsequent return of semi-finished and finished goods from the mainland to Hong Kong. The mainland has been the most important trading partner of Hong Kong over the past 10 years. It was the largest supplier of imports and destination of both re-exports and domestic exports of Hong Kong, accounting for on average 38, 33 and 26 per cent of Hong Kong's total imports, re-exports and domestic exports, respectively. Despite the regional financial turmoil since late 1997, the mainland remained Hong Kong's largest trading partner last year, accounting for 38 per cent of Hong Kong's total trade. For more information on this series of articles, write to the General Statistics Branch (2) of the Census and Statistics Department, 21/F, Wan Chai Tower, 12 Harbour Road, Wan Chai, Hong Kong, or call 2582-4004. The address of the department's homepage is http://www.info.gov.hk/censtated/