Economy of Hong Kong

Economy of Hong Kong

Central and Victoria Habour of Hong Kong
Currency	Hong Kong dollar (HKD)
Fiscal year	1 April – 31 March
Trade organisations	APEC and WTO
Statistics
GDP	PPP: $293.311 billion (2008 est.) PPP per capita rank: 9th Nominal per capita rank: 31st (2008)
GDP growth	-3.1% (2009 est.)
GDP per capita	$29,826 (2009 est.)
GDP by sector	agriculture: (0.1%) industry: (9%) services: (90.9%) (2008 est.)
Inflation (CPI)	2.0% (2007 est.)
Population below poverty line	N/A
Gini coefficient	53.3 (2007)
Labour force	3.64 million (2007 est.)
Labour force by occupation	manufacturing (6.5%), construction (2.1%), wholesale and retail trade, restaurants, and hotels (43.3%), financing, insurance, and real estate (20.7%), transport and communications (7.8%), community and social services (19.5%)
Unemployment	4.3% (July 2010)
Main industries	textiles, clothing, tourism, banking, shipping, electronics, plastics, toys, watches, clocks
External
Exports	$365.2 billion (2008 est.)
Main export partners	mainland China (48.7%), United States (13.7%), Japan (4.5%) (2007)
Imports	$387.9 billion (2008 est.)
Main import partners	mainland China (46.3%), Japan (10%), Taiwan (7.1%), Singapore (6.8%), United States (4.9%), South Korea (4.2%) (2007)
Gross external debt	$78.84 billion (31 December 2008 est.)
Public finances
Government debt	14.5% of GDP (2008 est.)
Revenues	$36.62 billion (2008 est)
Expenses	$38.89 billion (2008 est.)
Economic aid	N/A
All values, unless otherwise stated, are in US dollars.

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, a rigorously 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 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.

In spite of being one of the richest economy, 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.

Stock exchange

Main article: Hong Kong Stock Exchange

The Hong Kong Stock Exchange is the 6th largest in the world, with a market capitalisation of about US$2.97 trillion. In 2006, the value of initial public offerings conducted in Hong Kong was second highest in the world after London. 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.

Economic predictions

Cathay Pacific City, the headquarters of Cathay Pacific

Since the 1997 handover 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, continue 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.

Positive non-interventionism

Main article: Positive non-interventionism

This policy has often been cited by economists 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.

Economic freedom

The economy functions well into the night.

Main article: Economic freedom

Hong Kong has ranked as the world's freest economy in the Wall Street Journal and Heritage Foundation's Index of Economic Freedom for 16 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.

Economic indicators

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 40+: 43.7%

Labour

• Labour force: 3.7 million (2009)
• Employed: 3.5 million (94.8%
  • 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: 191,700 (5.2%)
• Underemployed: 84,308 (2.3%)

FY 2010-11 budget

• Operating Revenues: HK$247.6 billion
• Operating Expenditures: $251.4 billion
• Balance: -$3.8 billion
• Fiscal reserves less government debt: HK$508.2 billion (end-March 2010)

Trade(2009)

• Two-way Trade: US$666.4 billion, -11.8% (2009), +12.2% p.a. (1980–2009)
  • With China:' $324.3 billion, 48.7% share (2009)
• Exports: $163.0 billion, 51.1% share (2009)
  • To China:' $318.7 billion, -7.8% (2009), +24.2% p.a. (1980–2009)
• Re-exports: $311.2 billion, -11.8% (2009), +17.3% p.a. (1980–2009)
  • To China:' $159.5 billion, 51.3% share (2009)
• Imports: $347.6 billion, -11.0% (2009), +12.2% p.a. (1980–2009)
  • From China:' $161.2 billion, 46.4% share (2009)

See 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
• Poverty Campaign: Speak Up
• Seamen's strike of 1922

External links

• Hong Kong Government
• Hong Kong Economic Structure, The Economist, 10-01-2007. Retrieved 24-02-2007.
• The Hong Kong Experiment by Milton Friedman
• Global Investment in Hong Kong Markets - Nicholas Vardy October 27, 2006
• Economic History of Hong Kong Catherine R. Schenk, University of Glasgow
• Key Economic and Social Indicators - Hong Kong Census and Statistics Department