Economy of Hong Kong


Economy of Hong Kong

Hong Kong's highly favorable geographical position and entrepot trading opportunities are wealth-generating assets. It has a superb sheltered natural harbor. For centuries, this had made Hong Kong a major haven for pirates before it became a British colony in 1841. Under British administration, it soon developed into a thriving legitimate international port. By the late 20th century, Hong Kong was the seventh largest port in the world and second only to New York and Rotterdam in terms of container throughput. The Kwai Chung container complex was the largest in Asia; while Hong Kong shipping owners were second only to those of Greece in terms of total tonnage holdings.

In addition to geographical position, another major natural industrial-commercial asset of Hong Kong has been human resources. The population of the territory was less than six million in the late 20th century. However, there was an abundance of labor close by in the region that could be readily tapped through direct external investment and outsourcing. In Hong Kong itself, a skilled, adaptable, and hard-working labor force coupled with the adoption of modern British/ Western business methods and technology ensured that opportunities for external trade, investment, and recruitment were maximized.

Since the 1970s, the economy of Hong Kong has been governed both under British and Chinese rule under an economic policy dubbed Positive non-interventionism espoused by former financial secretary John James Cowperthwaite.

Traditionally, the Hong Kong government has raised revenue from taxation and the sale of land but not engaged in industry and commerce for profit. From its revenues, the government has built roads, schools, hospitals, and other public infrastructure facilities and services. It has also operated a welfare insurance scheme. However, the authorities have generally avoided owning and running business enterprises, engaging in trade protectionism, or imposing regulatory controls of the kind that have so distorted industrial-commercial activity and generated high costs and inefficiency elsewhere. There has been relatively little popular pressure for higher government spending. Over the decades, successive political administrations have managed to avoid running up large budget deficits; and by restraining public borrowing, credit expansion and inflation have been held in check.

Measuring discrepancies between the rich and poor with the Gini Coefficient indicates that the wealth gap continues to widen in Hong Kong since the new millennium. As of 2006 Hong Kong's measurement is at 53.3, which means the difference between the rich and poor is far greater than that of the People's Republic of China. [Msnbc. " [http://www.msnbc.msn.com/id/19289044/ Hong Kong's wealth gap widens since handover] ." "HK wealth gap widens." Retrieved on 2007-07-06.] Many of the financial tycoons also oppose universal suffrage, since the large number of poor would vote for populists who promise costly social programs. [Msnbc. " [http://www.msnbc.msn.com/id/19378582/site/newsweek/page/4/ Reinventing Hong Kong] ." "Ten years after the change-over, Hong Kong is positioning itself to become Asia's New York City." Retrieved on 2007-07-06.]

Hong Kong seems likely to remain a highly free market-enterprise society. Such things as political production planning and price and import controls are fundamentally incompatible with the kind of globally open, competitive economic environment in which Hong Kong firms and industries operate.

Resources

Hong Kong has little arable land and few natural resources within its borders, and must therefore import most of its food and raw materials. Hong Kong is the world's 11th largest trading entity, [" [http://www.info.gov.hk/info/hkbrief/eng/ahk.htm About Hong Kong] ", Government Information Centre] with the total value of imports and exports exceeding its gross domestic product. As of 2006, there are 114 countries that maintain consulates in Hong Kong, more than any other city in the world. Much of Hong Kong's exports consists of re-exports, which are products made outside of the territory, especially in mainland China, and distributed through Hong Kong. Even before the transfer of sovereignty to the People's Republic of China, Hong Kong has established extensive trade and investment ties with mainland China. The territory's autonomous status enables it to serve as a point of entry for investments and resources flowing into the mainland.

History

During Hong Kong's time as a British Colony, Positive non-interventionism was the economic policy of Hong Kong. It was first officially implemented in 1971 by John James Cowperthwaite, who observed that the economy was doing well in the absence of government intervention. The policy was continued by subsequent Financial Secretaries, including Sir Philip Haddon-Cave. Hong Kong's model allowed for the flexibility and renovation of any given industry in a very short time] . The Index has been categorized as using inappropriately weighted indicators for economic freedom, leading to wealthy and/or conservative countries with barriers to trade placing high on the list, while poor and/or socialist countries with fewer restrictionsrestrictions on trade place low [http://www.dollarsandsense.org/archives/2005/0305miller.html John Miller at Dollars & Sense] . Neither does the Index account for the actions of governments to nurture business [http://www.dollarsandsense.org/archives/2005/0305miller.html John Miller at Dollars & Sense] in the manner of the Japanese Zaibatsus during the late 20th C, that helped lead to the Japanese economic miracle. It also places first in the [http://www.freetheworld.com/2007/EFW2007BOOK2.pdf Economic Freedom of the World Report] .

Economic Indicators

Population

* Inflation rate (consumer prices): +2.0% (2007)
* Unemployment rate: 4.1%
* Labour Force Participation Rate by sex (Sep-Nov 2007) [Hong Kong Census and Statistics Department. " [http://www.censtatd.gov.hk/hong_kong_statistics/statistical_tables/index.jsp?charsetID=1&subjectID=2&tableID=007 Labour Force and Labour Force Participation Rates (LFPRs) by Sex] ." "LFPR." Retrieved on 2007-03-14.]
** "Male:" 71.2%
** "Female:" 53.0%
* Labour Force Participation Rate by age group (Sep-Nov 2007) [Hong Kong Census and Statistics Department. " [http://www.censtatd.gov.hk/hong_kong_statistics/statistical_tables/index.jsp?charsetID=1&subjectID=2&tableID=008 Labour Force and Labour Force Participation Rates (LFPRs) by Age Group] ." "LFPR." Retrieved on 2007-03-14.]
** "Age 15-24:" 42.4%
** "Age 25-44:" 85.5%
** "Age 45-64:" 64.6%
** "Age 65 and over:" 5.3%

GDP

* GDP (nominal) - US$208.7 billion (2007)
* GDP - real growth rate: 6.8% (2007)
* GDP - per capita: US$30,157 (2007))
* GDP - composition by sector: (2006)
** "Agriculture:" 0.1%
** "Industry:" 11.9% (of which: manufacturing 3.1%)
** "Services:" 88.0% (of which: trade and retailing: 25.7%)

Labour

* Average Work Week: 47 hours per week [Steers, Richard. [1999] (1999). Made in Korea: Chung Ju Yung and the Rise of Hyundai. United Kingdom: Routledge. ISBN 0415920507]

* Labour force - by sector: (2006 est) [Hong Kong census. " [http://www.censtatd.gov.hk/FileManager/EN/Content_800/labour.pdf Census labour data pdf] ." "Labour." Retrieved on 2007-03-14.]
** "Agriculture and fishing:" 0.3%
** "Mining and quarrying:" 0.05%
** "Manufacturing:" 5.1%
** "Electricity, gas and water:" 0.4%
** "Construction:" 8.0%
** "Wholesale and retail trades:" 10.5%
** "Import and export trade:" 16.4%
** "Restaurants and hotels:" 7.1%
** "Transport and storage:" 9.4%
** "Communications:" 1.1%
** "Financial services:" 5.3%
** "Real estate and business services:" 10.1%
** "Public administration:" 3.7%
** "Education and health services:" 7.6%
** "Personal services:" 9.0%
** "Recreational, other community and social services:" 5.9%

FY 2007-08 Budget

* Operating Revenues: HK$248.3 billion (US$$31.8 billion)
** "of which, direct taxes:" HK$130.9 billion
** "of which, other recurrent revenue:" HK$117.4 billion
* Capital Revenue: HK$76.7 billion
* = Government Revenue HK$346.9 billion
* Operating Expenditures: HK$206.4 billion (US$$26.5 billion)
* Capital Expenditures: HK$30.1 billion
* = Government Expenditures: HK$237.2 billion
* Subventions and other public sector spending: HK$19.4 billion
* = Public Expenditure: HK$255.8 billion
* Fiscal reserves less government debt: HK$460.3 billion (end-March 2008)

Trade and investment (2007)

* Exports: $344.9 billion f.o.b., including re-exportsTdcTrade. " [http://www.tdctrade.com/main/economic.htm TdcTrade.com] ." "Economic and Trade info on Hong Kong." Retrieved on 2007-03-14.]
** "Exports - partners:" Mainland China 48.7%, USA 13.7%, Japan 4.5%, Germany 3.0%
** "Exports - commodities:" clothing, textiles, footwear, electrical appliances, watches and clocks, toys, plastics, precious stones

* Imports: $368.4 billion (2007)
** "Imports - partners:" Mainland China 46.3%, Japan 10.0%, Taiwan 7.1%, Singapore 6.8%
** "Imports - commodities:" foodstuffs, transport equipment, raw materials, semimanufactures, petroleum; a large share is re-exported

ee also

* Mainland and HK Closer Economic Partnership Arrangement (CEPA)
* Mainland and Macau Closer Economic Partnership Arrangement (CEPA)
* Economy of the People's Republic of China
* Economy of East Asia
* Individual Visit Scheme
* Positive non-interventionism
* The Hongs
* Taiwan Miracle
*

External links

* [http://www.gov.hk Hong Kong Government]
* [http://www.economist.com/countries/HongKong/profile.cfm?folder=Profile-Economic%20Structure Hong Kong Economic Structure] , The Economist, 10-01-2007. Retrieved 24-02-2007.
* [http://www.hooverdigest.org/983/friedman.html The Hong Kong Experiment] by Milton Friedman
* [http://www.theglobalguru.com/article.php?id=68&offer=GURU001 Global Investment in Hong Kong Markets] - Nicholas Vardy October 27, 2006
* [http://eh.net/encyclopedia/article/schenk.HongKong Economic History of Hong Kong] Catherine R. Schenk, University of Glasgow
* [http://www.censtatd.gov.hk/hong_kong_statistics/key_economic_and_social_indicators/index.jsp Key Economic and Social Indicators] - Hong Kong Census and Statistics Department

References


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