China – Economy
overview of HongKong
As one of the world's leading international financial
centres, Hong Kong's service-oriented economy is characterized by
its low taxation, almost free port trade and well established
international financial market. Its currency, called the Hong Kong
dollar, is legally issued by three major international commercial
banks, and pegged to the US dollar. Interest rates are
determined by the individual banks in Hong Kong to ensure it is fully market-driven. There
is no officially recognised central banking system, although Hong Kong
Monetary Authority functions as a financial regulatory
authority. When destabilising factors are hitting the financial market of
Hong Kong, they will be monitored and inspected by the Hong Kong Monetary
Authority, the financial regulatory agency in Hong Kong. Electronic
finance trading is evolutionarily impacting the financial market of Hong
Kong.
According to Index of Economic Freedom, Hong Kong
has had the highest degree of economic freedom in the world since the inception
of the Index in 1995. Its economy is governed under positive
non-interventionism, and is highly dependent on international trade and
finance. In 2009, Hong Kong's real economic growth fell by 2.8% as a result of
the global financial turmoil.
Hong Kong's economic strengths include a sound banking
system, virtually no public debt, a strong legal system, ample foreign
exchange reserves at around US $408 billion as of mid-2017, rigorous
anti-corruption measures and close ties with the mainland China. Despite the
downturn, these strengths enable it to quickly respond to changing
circumstances. It has the most efficient and a corruption-free application
procedure, the lowest income tax, the lowest corporate tax as well as an abundant
and sustainable government finance. The government of Hong Kong consistently
upheld the policy of encouraging and supporting activities of private
businesses. Examples include the Cyberport and the Hong Kong
Disneyland. This has a positive impact on the overall economic performance by
removing unnecessary barriers for the private enterprises in the Special
Administrative Region. The Hong Kong Stock Exchange is a favourable
destination for international firms and firms from the mainland China to be
listed due to Hong Kong's highly internationalised and
modernised financial industry along with its capital
market in Asia, its size, regulations and available financial tools, which
are comparable to London and New York.
Hong Kong's gross domestic product has grown 180 times
between 1961 and 1997. Also, the GDP per capita rose by 87 times within the
same time frame. Its economy size is slightly bigger than Israel
and Ireland and its GDP per capita at purchasing power parity is
the sixth highest globally in 2011, higher than the United States and the
Netherlands and slightly lower than the Brunei.
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. Hong Kong is a full Member of World Trade
Organization. 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 the world.
The Hong Kong Stock Exchange is the sixth largest in the
world, with a market capitalisation of about US$3.732 trillion.
Hong Kong has also had an abundant supply of labour from the
regions 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. Prices and wages in
Hong Kong are relatively flexible, depending on the performance and stability
of the economy of Hong Kong.
Hong Kong raises revenues from the sale and taxation of
land and through attracting international businesses to provide capital
for its public finance, due to its low tax policy. According to Healy
Consultants, Hong Kong has most attractive business environment within East
Asia, in terms of attracting foreign direct
investment (FDI). This has led to Hong Kong being the third largest
recipient of FDI in the world.[34] From its revenues, the government has
built roads, schools, hospitals, and other public infrastructure facilities and
services. Low levels of spending relative to GDP by having no spending on armed
forces, minimal outlays for foreign affairs and modest recurrent social welfare
spending have allowed the accumulation of very large fiscal reserves with
minimal foreign debt.