Economy of Hong Kong
Encyclopedia
As one of the world's leading international financial centres, Hong Kong
has a major capitalist service economy characterised by low taxation and free trade, and the currency, Hong Kong dollar
, is the ninth most traded currency in the world. Hong Kong has remained as the world's freest economy, according to Index of Economic Freedom
since the inception of the index in 1995. The economy, governed under positive non-interventionism
, is highly dependent on international trade and finance and in 2009 the real economic growth fell by 2.8% as a result of the global financial turmoil. Despite the downturn, Hong Kong’s economic strengths, including a sound banking system, virtually no public debt, a strong legal system, ample foreign exchange reserves
, rigorous anti-corruption measures and close ties with the mainland China, enable it to quickly respond to changing circumstances.
Hong Kong's gross domestic product
, between 1961 and 1997, has grown 180 times while per capita GDP rose by 87 times. Its economy size is slightly bigger than Israel
and Czech Republic
and its GDP per capita at purchasing power parity is the 7th highest globally, more than Switzerland
and Netherlands
and slightly lower than the United States
.
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. The Hong Kong Stock Exchange
is the 6th largest in the world, with a market capitalisation of about US$
2.97 trillion.
Hong Kong has also had an abundant supply of labour from the region nearby. A skilled labour force coupled with the adoption of modern British/Western business methods and technology ensured that opportunities for external trade, investment, and recruitment were maximised.
The Hong Kong government raises revenues from the sale and taxation 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. The government has avoided running up large budget deficits; and by restraining public borrowing, credit expansion and inflation have been held in check.
Despite being one of the world's richest economies, the Gini Coefficient
indicates that the wealth gap continues to widen in Hong Kong. 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 mainland China
.
is the 6th largest in the world, with a market capitalisation of about US$
2.97 trillion. In 2006, the value of initial public offering
s conducted in Hong Kong was second highest in the world after London
. In 2009, Hong Kong raised 22 percent of worldwide initial public offering (IPO) capital, becoming the largest centre of IPOs in the world. The rival stock exchange of the future is expected to be the Shanghai Stock Exchange
. As of 2006, Hong Kong Exchanges and Clearing
(HKEX) has an average daily turnover of 33.4 billion dollars, which is 12 times that of Shanghai.
Hong Kong's economic future became far more exposed to the challenges of economic globalisation
competition directly from mainland China. Shanghai
claimed in particular to have a geographical advantage, and a municipal government that dreams of turning the city into China's main economic centre by as early as 2010. The target is to allow Shanghai to catch up to New York
by 2040-2050, with the eventual projection that China will be Asia's most prosperous economy by 2040. Hong Kong, on the other hand, continues to have a more positive and realistic approach. It will sustainably be the international financial centre in China. Until then, Hong Kong is expected to have higher overall economic figures yearly. Hong Kong's principal trading partners remain to be China, United States
, Japan
, Taiwan
, Germany
, Singapore
, and South Korea
.
s such as Milton Friedman
and the Cato Institute
as an example of the benefits of laissez-faire capitalism. However others have argued that the economic strategy was inadequately characterised by the term laissez-faire. They point out that there are still many ways in which the government is involved in the economy. The government has intervened to create economic institutions such as the Hong Kong Stock Market and has been involved in public works projects and social welfare spending. All land in Hong Kong is owned by the government and leased to private users. By restricting the sale of land leases, the Hong Kong government keeps the price of land at what some would say are artificially high prices and this allows the government to support public spending with a low tax rate.
Hong Kong has ranked as the world's freest economy in the Wall Street Journal and Heritage Foundation
's Index of Economic Freedom
for 17 consecutive years, since the inception of the index in 1995. The Index measures restrictions on business, trade, investment, finance, property rights and labour and considers the impact of corruption, government size and monetary controls in 183 economies. Hong Kong is the only one to have ever scored 90 points or above on the 100 point scale.
Re-exports: $381.2 billion, +22.8% (2010), +14.3% p.a. (1986–2010)
Imports: $433.5 billion, +25.0% (2010), +11.3% p.a. (1986–2010)
Hong Kong
Hong Kong is one of two Special Administrative Regions of the People's Republic of China , the other being Macau. A city-state situated on China's south coast and enclosed by the Pearl River Delta and South China Sea, it is renowned for its expansive skyline and deep natural harbour...
has a major capitalist service economy characterised by low taxation and free trade, and the currency, Hong Kong dollar
Hong Kong dollar
The Hong Kong dollar is the currency of the jurisdiction. It is the eighth most traded currency in the world. In English, it is normally abbreviated with the dollar sign $, or alternatively HK$ to distinguish it from other dollar-denominated currencies...
, is the ninth most traded currency in the world. Hong Kong has remained as the world's freest economy, according to Index of Economic Freedom
Index of Economic Freedom
The Index of Economic Freedom is a series of 10 economic measurements created by The Heritage Foundation and The Wall Street Journal. Its stated objective is to measure the degree of economic freedom in the world's nations....
since the inception of the index in 1995. The economy, governed under positive non-interventionism
Positive non-interventionism
Positive non-interventionism was the economic policy of Hong Kong; this policy can be traced back to the time when Hong Kong was under British rule...
, is highly dependent on international trade and finance and in 2009 the real economic growth fell by 2.8% as a result of the global financial turmoil. Despite the downturn, Hong Kong’s economic strengths, including a sound banking system, virtually no public debt, a strong legal system, ample foreign exchange reserves
Foreign exchange reserves
Foreign-exchange reserves in a strict sense are 'only' the foreign currency deposits and bonds held by central banks and monetary authorities. However, the term in popular usage commonly includes foreign exchange and gold, Special Drawing Rights and International Monetary Fund reserve positions...
, rigorous anti-corruption measures and close ties with the mainland China, enable it to quickly respond to changing circumstances.
Hong Kong's gross domestic product
Gross domestic product
Gross domestic product refers to the market value of all final goods and services produced within a country in a given period. GDP per capita is often considered an indicator of a country's standard of living....
, between 1961 and 1997, has grown 180 times while per capita GDP rose by 87 times. Its economy size is slightly bigger than Israel
Israel
The State of Israel is a parliamentary republic located in the Middle East, along the eastern shore of the Mediterranean Sea...
and Czech Republic
Czech Republic
The Czech Republic is a landlocked country in Central Europe. The country is bordered by Poland to the northeast, Slovakia to the east, Austria to the south, and Germany to the west and northwest....
and its GDP per capita at purchasing power parity is the 7th highest globally, more than Switzerland
Switzerland
Switzerland name of one of the Swiss cantons. ; ; ; or ), in its full name the Swiss Confederation , is a federal republic consisting of 26 cantons, with Bern as the seat of the federal authorities. The country is situated in Western Europe,Or Central Europe depending on the definition....
and Netherlands
Netherlands
The Netherlands is a constituent country of the Kingdom of the Netherlands, located mainly in North-West Europe and with several islands in the Caribbean. Mainland Netherlands borders the North Sea to the north and west, Belgium to the south, and Germany to the east, and shares maritime borders...
and slightly lower than the United States
United States
The United States of America is a federal constitutional republic comprising fifty states and a federal district...
.
By the late 20th century, Hong Kong was the seventh largest port in the world and second only to New York
New York
New York is a state in the Northeastern region of the United States. It is the nation's third most populous state. New York is bordered by New Jersey and Pennsylvania to the south, and by Connecticut, Massachusetts and Vermont to the east...
and Rotterdam
Rotterdam
Rotterdam is the second-largest city in the Netherlands and one of the largest ports in the world. Starting as a dam on the Rotte river, Rotterdam has grown into a major international commercial centre...
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
Greece
Greece , officially the Hellenic Republic , and historically Hellas or the Republic of Greece in English, is a country in southeastern Europe....
in terms of total tonnage holdings. The Hong Kong Stock Exchange
Hong Kong Stock Exchange
The Hong Kong Stock Exchange is a stock exchange located in Hong Kong. It is Asia's third largest stock exchange in terms of market capitalization behind the Tokyo Stock Exchange and the Shanghai Stock Exchange and fifth largest in the world...
is the 6th largest in the world, with a market capitalisation of about US$
United States dollar
The United States dollar , also referred to as the American dollar, is the official currency of the United States of America. It is divided into 100 smaller units called cents or pennies....
2.97 trillion.
Hong Kong has also had an abundant supply of labour from the region nearby. A skilled labour force coupled with the adoption of modern British/Western business methods and technology ensured that opportunities for external trade, investment, and recruitment were maximised.
The Hong Kong government raises revenues from the sale and taxation of land
Land value tax
A land value tax is a levy on the unimproved value of land. It is an ad valorem tax on land that disregards the value of buildings, personal property and other improvements...
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. The government has avoided running up large budget deficits; and by restraining public borrowing, credit expansion and inflation have been held in check.
Despite being one of the world's richest economies, the Gini Coefficient
Gini coefficient
The Gini coefficient is a measure of statistical dispersion developed by the Italian statistician and sociologist Corrado Gini and published in his 1912 paper "Variability and Mutability" ....
indicates that the wealth gap continues to widen in Hong Kong. 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 mainland China
Mainland China
Mainland China, the Chinese mainland or simply the mainland, is a geopolitical term that refers to the area under the jurisdiction of the People's Republic of China . According to the Taipei-based Mainland Affairs Council, the term excludes the PRC Special Administrative Regions of Hong Kong and...
.
Stock exchange
The Hong Kong Stock ExchangeHong Kong Stock Exchange
The Hong Kong Stock Exchange is a stock exchange located in Hong Kong. It is Asia's third largest stock exchange in terms of market capitalization behind the Tokyo Stock Exchange and the Shanghai Stock Exchange and fifth largest in the world...
is the 6th largest in the world, with a market capitalisation of about US$
United States dollar
The United States dollar , also referred to as the American dollar, is the official currency of the United States of America. It is divided into 100 smaller units called cents or pennies....
2.97 trillion. In 2006, the value of initial public offering
Initial public offering
An initial public offering or stock market launch, is the first sale of stock by a private company to the public. It can be used by either small or large companies to raise expansion capital and become publicly traded enterprises...
s conducted in Hong Kong was second highest in the world after London
London
London is the capital city of :England and the :United Kingdom, the largest metropolitan area in the United Kingdom, and the largest urban zone in the European Union by most measures. Located on the River Thames, London has been a major settlement for two millennia, its history going back to its...
. In 2009, Hong Kong raised 22 percent of worldwide initial public offering (IPO) capital, becoming the largest centre of IPOs in the world. The rival stock exchange of the future is expected to be the Shanghai Stock Exchange
Shanghai Stock Exchange
The Shanghai Stock Exchange , abbreviated as 上证所/上證所 or 上交所, is a stock exchange that is based in the city of Shanghai, China. It is one of the two stock exchanges operating independently in the People's Republic of China, the other is the Shenzhen Stock Exchange...
. As of 2006, Hong Kong Exchanges and Clearing
Hong Kong Exchanges and Clearing
Hong Kong Exchanges and Clearing Limited , also 香港交易所 or 港交所; abbreviated as HKEx; ) is the holding company for The Stock Exchange of Hong Kong Limited , Hong Kong Futures Exchange Limited and Hong Kong Securities Clearing Company Limited...
(HKEX) has an average daily turnover of 33.4 billion dollars, which is 12 times that of Shanghai.
Economic predictions
Since the 1997 handoverTransfer of the sovereignty of Hong Kong
The transfer of sovereignty over Hong Kong from the United Kingdom to the People's Republic of China, referred to as ‘the Return’ or ‘the Reunification’ by the Chinese and ‘the Handover’ by others, took place on 1 July 1997...
Hong Kong's economic future became far more exposed to the challenges of economic globalisation
World economy
The world economy, or global economy, generally refers to the economy, which is based on economies of all of the world's countries, national economies. Also global economy can be seen as the economy of global society and national economies – as economies of local societies, making the global one....
competition directly from mainland China. Shanghai
Shanghai
Shanghai is the largest city by population in China and the largest city proper in the world. It is one of the four province-level municipalities in the People's Republic of China, with a total population of over 23 million as of 2010...
claimed in particular to have a geographical advantage, and a municipal government that dreams of turning the city into China's main economic centre by as early as 2010. The target is to allow Shanghai to catch up to New York
New York
New York is a state in the Northeastern region of the United States. It is the nation's third most populous state. New York is bordered by New Jersey and Pennsylvania to the south, and by Connecticut, Massachusetts and Vermont to the east...
by 2040-2050, with the eventual projection that China will be Asia's most prosperous economy by 2040. Hong Kong, on the other hand, continues to have a more positive and realistic approach. It will sustainably be the international financial centre in China. Until then, Hong Kong is expected to have higher overall economic figures yearly. Hong Kong's principal trading partners remain to be China, United States
United States
The United States of America is a federal constitutional republic comprising fifty states and a federal district...
, Japan
Japan
Japan is an island nation in East Asia. Located in the Pacific Ocean, it lies to the east of the Sea of Japan, China, North Korea, South Korea and Russia, stretching from the Sea of Okhotsk in the north to the East China Sea and Taiwan in the south...
, Taiwan
Republic of China
The Republic of China , commonly known as Taiwan , is a unitary sovereign state located in East Asia. Originally based in mainland China, the Republic of China currently governs the island of Taiwan , which forms over 99% of its current territory, as well as Penghu, Kinmen, Matsu and other minor...
, Germany
Germany
Germany , officially the Federal Republic of Germany , is a federal parliamentary republic in Europe. The country consists of 16 states while the capital and largest city is Berlin. Germany covers an area of 357,021 km2 and has a largely temperate seasonal climate...
, Singapore
Singapore
Singapore , officially the Republic of Singapore, is a Southeast Asian city-state off the southern tip of the Malay Peninsula, north of the equator. An island country made up of 63 islands, it is separated from Malaysia by the Straits of Johor to its north and from Indonesia's Riau Islands by the...
, and South Korea
South Korea
The Republic of Korea , , is a sovereign state in East Asia, located on the southern portion of the Korean Peninsula. It is neighbored by the People's Republic of China to the west, Japan to the east, North Korea to the north, and the East China Sea and Republic of China to the south...
.
Positive non-interventionism
This policy has often been cited by economistEconomist
An economist is a professional in the social science discipline of economics. The individual may also study, develop, and apply theories and concepts from economics and write about economic policy...
s such as Milton Friedman
Milton Friedman
Milton Friedman was an American economist, statistician, academic, and author who taught at the University of Chicago for more than three decades...
and the Cato Institute
Cato Institute
The Cato Institute is a libertarian think tank headquartered in Washington, D.C. It was founded in 1977 by Edward H. Crane, who remains president and CEO, and Charles Koch, chairman of the board and chief executive officer of the conglomerate Koch Industries, Inc., the largest privately held...
as an example of the benefits of laissez-faire capitalism. However others have argued that the economic strategy was inadequately characterised by the term laissez-faire. They point out that there are still many ways in which the government is involved in the economy. The government has intervened to create economic institutions such as the Hong Kong Stock Market and has been involved in public works projects and social welfare spending. All land in Hong Kong is owned by the government and leased to private users. By restricting the sale of land leases, the Hong Kong government keeps the price of land at what some would say are artificially high prices and this allows the government to support public spending with a low tax rate.
Economic freedom
Hong Kong has ranked as the world's freest economy in the Wall Street Journal and Heritage Foundation
Heritage Foundation
The Heritage Foundation is a conservative American think tank based in Washington, D.C. Heritage's stated mission is to "formulate and promote conservative public policies based on the principles of free enterprise, limited government, individual freedom, traditional American values, and a strong...
's Index of Economic Freedom
Index of Economic Freedom
The Index of Economic Freedom is a series of 10 economic measurements created by The Heritage Foundation and The Wall Street Journal. Its stated objective is to measure the degree of economic freedom in the world's nations....
for 17 consecutive years, since the inception of the index in 1995. The Index measures restrictions on business, trade, investment, finance, property rights and labour and considers the impact of corruption, government size and monetary controls in 183 economies. Hong Kong is the only one to have ever scored 90 points or above on the 100 point scale.
GDP
- GDP (nominal, 2009) – HK$1,633.5 billion (US$210.7 billion)
- GDP - real growth rate: -2.7% (2009)
- GDP - per capita: US$30,087 (2009)
- GDP - composition by sector: (2008)
- Manufacturing: 2.3%
- Finance: 25.0%
- Trade: 26.4%
- "Other Services: 34.7%
- Other Sectors: 11.6%
Population
- Population: – 7.03 million (end-2009), +0.6% p.a. (2000–09)
- Unemployment rate: 5.2% (2009)
- Labour Force Participation Rate(2009)
- Overall: 60.3%
- Male: 68.9%
- Female: 52.9%
- Age 15-24: 8.5%
- Age 25-39: 36.8%
- Age 39+: 43.7%
Labour
- Labour force: 3.7 million (end-2010)
- Employed: 3.56 million (96.2%, end-2010)
- Public administration, social and personal services 24.8%
- Finance, insurance and real estate 18.3%
- Retail, accommodation and food services 15.7%
- Import/export trade 14.9%
- Transport, communications and logistics 12.6%
- Other services 10.6%
- Other sectors 3.1%
- Average Work Week: 45 hours
- Unemployed: 136,000 (4%, end-2010)
- Underemployed: 67,000 (1.8%, end-2010)
FY 2010-11 budget
- Operating Revenues: HK$247.6 billion
- Operating Expenditures: $251.4 billion
- Balance: -$3.8 billion
- Government debt HK$11,227.5 million (US$1.44 billion; June 30, 2011)http://www.info.gov.hk/gia/general/201107/29/P201107290289.htm
Trade(2010)
- Two-way Trade: US$823.9 billion, +23.6% (2010), +11.1% p.a. (1986–2010)
- With China: $402.6 billion, +24.2% (2010), 48.9% share
- Exports: $390.4 billion, +22.7% (2010), +10.8% p.a. (1986–2010)
- To China:
- To China: $201.7 billion, +26.7% (2010), 52.9% share
- From China:
See also
- Mainland and HK Closer Economic Partnership Arrangement (CEPA)Mainland and Hong Kong Closer Economic Partnership ArrangementThe Mainland and Hong Kong Closer Economic Partnership Arrangement, or Closer Economic Partnership Arrangement for short, is an economic agreement between the Government of the Hong Kong Special Administrative Region and the Central People's Government of the People's Republic of China, signed on...
- Mainland and Macau Closer Economic Partnership Arrangement (CEPA)
- Economy of the People's Republic of ChinaEconomy of the People's Republic of ChinaThe People's Republic of China ranks since 2010 as the world's second largest economy after the United States. It has been the world's fastest-growing major economy, with consistent growth rates of around 10% over the past 30 years. China is also the largest exporter and second largest importer of...
- Economy of East AsiaEconomy of East AsiaThe economy of East Asia is one of the most successful regional economies of the world. It is home of some of the world's largest and most prosperous economies : China, Japan, Hong Kong, Taiwan and South Korea....
- Individual Visit SchemeIndividual Visit SchemeThe Individual Visit Scheme began on July 28, 2003. It allowed travelers from Mainland China to visit Hong Kong and Macau on an individual basis...
- Positive non-interventionismPositive non-interventionismPositive non-interventionism was the economic policy of Hong Kong; this policy can be traced back to the time when Hong Kong was under British rule...
- The HongsThe HongsThe Hongs were major business houses in Canton and later Hong Kong with significant influence on patterns of consumerism, trade, manufacturing and other key areas of the economy...
- Taiwan MiracleTaiwan MiracleThe Taiwan Miracle or Taiwan Economic Miracle refers to the rapid industrialization and economic growth of Taiwan during the latter half of the twentieth century...
- Poverty Campaign: Speak UpPoverty Campaign: Speak UpPoverty Campaign: Speak Up is a society show on Hong Kong's TVB sponsored by general manager Stephen Chan. The title literally means "The story of a million people" as the show allows the poor to speak out about their poverty experience. Most complaints are against the way the Hong Kong...
- Seamen's strike of 1922Seamen's strike of 1922The Seamen's strike of 1922 began in January of that year when over 30,000 Chinese seamen from Hong Kong and Guangzhou went on strike for higher wages. Led by the Seamen’s Union, the strike was the response of the union after the refusal of shipping companies to increase salaries...
External links
- Hong Kong Government
- Hong Kong Economic Structure, The Economist, 10-01-2007. Retrieved 24-02-2007.
- The Hong Kong Experiment by Milton FriedmanMilton FriedmanMilton Friedman was an American economist, statistician, academic, and author who taught at the University of Chicago for more than three decades...
- Economic History of Hong Kong Catherine R. Schenk, University of Glasgow
- Key Economic and Social Indicators - Hong Kong Census and Statistics Department
- Hong Kong Forex Nows (IBTimes HK)