Are Hong Kong's manufacturing and trade industries really shrinking? No, says a senior economist.

"The industries haven't shrunk in the past and they're not shrinking now," said Edward Leung, chief economist of the Hong Kong Trade Development Council (TDC), yesterday. "Instead, they will remain strong as the pillar of Hong Kong's economy in the future."

Speaking to reporters when TDC issued its latest research on the contributions of the manufacturing and trade industries to the economy, Leung said: "The fact that Hong Kong's manufacturing activities continued to be relocated outside, especially in the Pearl River Delta region, does not necessarily mean that Hong Kong's manufacturing and trade industries are shrinking."

"Though the total number of factories in Hong Kong has fallen, from 50,566 in 1989 to 15,332 in March 2006, as many as 44,810 new trading companies have set up shop here in the same period."

A TDC survey that covered 682 Hong Kong exporters showed that 45 per cent respondents would expand their business in the territory in the next three years and 46 per cent would increase the number of their staff.

"Before the end of 2008, the trading sector alone is expected to create 90,000 jobs in Hong Kong," Leung said.

The manufacturing and trading industries generated as many as 1.35 million jobs last year, according to a recent study of the Chinese University of Hong Kong (CUHK).

"The figure (1.35 million) includes jobs created indirectly by the manufacturing and trade sectors... it's about 75 per cent more than the government data, which is 773,400," Leung said.

"People working in the sectors account for 40 per cent of Hong Kong's total (workforce)."

The CUHK study, commissioned by TDC, found that Hong Kong's manufacturing and trade industries were still the biggest contributors to the economy.

"Based on our calculation the sectors contributed about HK$558 billion to Hong Kong's economy in 2004, 80 per cent more than the official figure of HK$312 billion," chairman of CUHK's economics department Sung Yun-wing said.

"We calculated not only the direct contributions of the sectors, but also the indirect ones, such as those generated by their demand for non-trading activities that included finance and insurance, transport and logistics, real estate and business services," Sung said.

"Therefore, the role played by the sectors is more significant than we generally think."