Economy of Hong Kong
|Economy of Hong Kong|
Central and Victoria Harbour of Hong Kong
|Currency||Hong Kong dollar (HKD)|
|1 April – 31 March|
|APEC and WTO|
|GDP||PPP: $381.3 billion (2013 est.)
PPP per capita rank: 8th
Nominal per capita rank: 25th (2010[update])1
|7.2% (2011 Q1)2|
GDP per capita
|HK$246,733; 2010 (US$50,936 PPP; 2012)3|
GDP by sector
|agriculture: (0.1%) industry: (9%) services: (90.9%) (2008 est.)|
Population below poverty line
|3.2343 million (end-2010)5|
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||3.4% (1/2011 – 3/2011)6|
|textiles, clothing, tourism, banking, shipping, electronics, plastics, toys, watches, clocks|
|Exports||$456.4 billion (2013)|
Main export partners
United States 9.9%
Japan 4.2% (2012 est.)8
|Imports||$520.6 billion (2013)|
Main import partners
South Korea 5.0%
United States 4.7% (2012 est.)9
|HK$1.5 billion (2014)|
|Revenues||$59.33 billion (2013 est)|
|Expenses||$54.23 billion (2013 est.)|
|Standard & Poor's:10
AAA (T&C Assessment)
|US$311.2 billion (2013)12|
As one of the world's leading international financial centers, Hong Kong's service-oriented economy is characterised by its low taxation, almost free port trade and well established international financial market.13 Its currency, called the Hong Kong dollar, is legally issued by three major international commercial banks,14 and pegged to the US Dollar.1516 Interest rates are determined by the individual banks in Hong Kong to ensure it is fully market-driven.17 There is no central banking system in Hong Kong.1819 When destabilising factors are hitting the financial market of Hong Kong, they will be monitored and inspected by the Hong Kong Monetary Authority. Electronic finance trading2021 is evolutionarily impacting the financial market of Hong Kong.22
According to Index of Economic Freedom,23 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, rigorous anti-corruption measures and close ties with the mainland China. Despite the downturn, these strengths enable it to quickly respond to changing circumstances.24 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 on 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.2526
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.27 Its economy size is slightly bigger than Israel and Ireland282930 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.31 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 fifth largest in the world, with a market capitalisation of about US$2.63 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.32
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).33 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.
Acting as a government, Hong Kong is the second highest ranked Asian government in the World Economic Forum's Network Readiness Index (NRI) – an indicator for determining the development level of a government’s information and communication technologies. Hong Kong ranked eighth overall in the 2014 NRI ranking, up from 14 in 2013.36
The Hong Kong Stock Exchange is the sixth largest in the world, with a market capitalisation of about US$2.97 trillion. In 2006, the value of initial public offerings (IPO) conducted in Hong Kong was second highest in the world after London.37 In 2009, Hong Kong raised 22 percent of IPO capital, becoming the largest centre of IPOs in the world.38 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.37
Since the 1997 handover, Hong Kong's economic future became far more exposed to the challenges of economic globalisation and the direct competition from cities in the mainland China. In particular, Shanghai claimed to have a geographical advantage. The Shanghai municipal government dreamt 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 2040–2050.39 Hong Kong, on the other hand, continues to have a more positive and realistic approach, and remains the principal international financial centre in China. Until then, Hong Kong is expected to have higher overall economic figures yearly. Hong Kong's main trading partners are China, the United States, Japan, Taiwan, Germany, Singapore, and South Korea.
Hong Kong's economic 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.40 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 consider as artificially high prices and this allows the government to support public spending with a low tax rate.41
Hong Kong has been ranked as the world's freest economy in the Index of Economic Freedom of Heritage Foundation for 20 consecutive years, since its inception in 1995.2342 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 in 2014 Index.43
- 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%
|Economy of Hong Kong|
|Other Hong Kong topics|
|Hong Kong Portal|
- Population: – 7.03 million (end-2009), +0.6% p.a. (2000–09)
- Unemployment rate: 5.2% (2009)
- Labour Force Participation Rate(2009)45
- Overall: 60.3%46
- Male: 68.9%
- Female: 52.9%
- Age 15–24: 8.5%
- Age 25–39: 36.8%
- Age 39+: 43.7%
- 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)
- 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; 30 June 2011)48
- 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:' $205.7 billion, +26.5% (2010), 52.7% share
- Re-exports: $381.2 billion, +22.8% (2010), +14.3% p.a. (1986–2010)
- To China:' $201.7 billion, +26.7% (2010), 52.9% share
- Imports: $433.5 billion, +25.0% (2010), +11.3% p.a. (1986–2010)
- From China:' $196.9 billion, +22.4% (2010), 45.4% share
- "Hong Kong SAR: Gross domestic product per capita, current prices (U.S. dollars)". World Economic Outlook Database, September 2011. International Monetary Fund. Retrieved 22 December 2011.
- National Income – Publications | Census and Statistics Department. Censtatd.gov.hk. Retrieved on 1 November 2012.
- National Income – Publications | Census and Statistics Department. Censtatd.gov.hk. Retrieved on 1 November 2012.
- Census and Statistics Department. http://www.statistics.gov.hk/pub/B10600012014MM06B0100.pdf. Missing or empty
- Census and Statistics Department. "Statistics on Labour Force, Unemployment and Underemployment".
- Labour – Overview | Census and Statistics Department. Censtatd.gov.hk. Retrieved on 1 November 2012.
- "Doing Business in Hong Kong 2013". World Bank. Retrieved 22 October 2012.
- "Export Partners of Hong Kong". CIA World Factbook. 2012. Retrieved 23 July 2013.
- "Import Partners of Hong Kong". CIA World Factbook. 2011. Retrieved 25 June 2013.
- "Sovereigns rating list". Standard & Poor's. Retrieved 26 May 2011.
- Rogers, Simon; Sedghi, Ami (15 April 2011). "How Fitch, Moody's and S&P rate each country's credit rating". The Guardian (London). Retrieved 31 May 2011.
- "International Reserves and Foreign Currency Liquidity – HONG KONG". International Monetary Fund. 5 May 2011. Retrieved 31 May 2011.
- LEGAL TENDER NOTES ISSUE ORDINANCE. legislation.gov.hk (30 June 1997)
- "Triennial Central Bank Survey of Foreign Exchange and Derivatives Market Activity in April 2007". Triennial Central Bank Survey 2007 (Bank for International Settlements): 7. September 2007. Retrieved 5 September 2010.
- Gough, Neil; Sang-Hun, Choe (19 July 2012). "Asian Financial Regulators Examine Local Lending Rates". The New York Times.
- http://www.bis.org/publ/bppdf/bispap12g.pdf (see page 134~136)
- "Index of Economic Freedom". Heritage Foundation.
- Background Note:Hong Kong, Diplomacy in action, U.S. Department of State]
- Rikkie Yeung (2008). Moving Millions: The Commercial Success and Political Controversies of Hong Kong's Railways. Hong Kong University Press. ISBN 978-962-209-963-0.
- "Nominal GDP list of countries. Data for the year 2010". World Economic Outlook Database, September 2011. International Monetary Fund. Retrieved 22 December 2011.
- "Gross domestic product (2009)". The World Bank: World Development Indicators database. World Bank. 27 September 2010. Retrieved 5 October 2010.
- Field listing – GDP (official exchange rate), CIA World Factbook
- Hong Kong, China – Member information. WTO. Retrieved on 1 November 2012.
- "Hong Kong Company Formation". Retrieved 27 August 2013.
- "UNCTAD World Investment Report". UNCTAD. Retrieved 27 August 2013.
- "NRI Overall Ranking 2014". World Economic Forum. Retrieved 28 June 2014.
- Hong Kong surpasses New York in IPOs, International Herald Tribune, 25 December 2006. Retrieved 2007-1-20.
- "Hong Kong IPOs May Raise Record $48 Billion in 2010, E&Y Says". Bloomberg. 21 December 2009.
- Richardson, Harry W. Bae, Chang-Hee C.  (2005) Globalization and Urban Development: Advances in Spatial Science. ISBN 3-540-22362-2
- Journal of Contemporary China (2000), 9(24) 291–308 http://psweb.sbs.ohio-state.edu/faculty/mcooper/ps536readings/cheung_interventionism.pdf
- Geocities. "Geocities." at the Wayback Machine (archived October 20, 2009) Doesn't Hong Kong show the potentials of "free market" capitalism?. Retrieved on 6 March 2008. (dead link)
- "The World's Freest Economy Is Also Its Least-Affordable Housing Market". Bloomburg BusinessWeek. Retrieved 28 January 2014.
- "2014 Index of Economic Freedom – Hong Kong". The Heritage Foundation. Retrieved 28 January 2014.
- Census and Statistics Department, www.censtatd.gov.hk.
- Hong Kong Census and Statistics Department
- Quarterly Report on General Household Survey, July to September 2009, Census and Statistics Department
- Financial results for the three months ended June 30, 2011. Info.gov.hk (30 June 2011). Retrieved on 1 November 2012.
- Search for Statistical Products | Census and Statistics Department. Censtatd.gov.hk. Retrieved on 1 November 2012.
- Hong Kong Government
- Hong Kong Economic Structure, The Economist, 10 Jan 2007. Retrieved 24 February 2007.
- The Hong Kong Experiment by Milton Friedman
- 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)
- World Bank Summary Trade Statistics Hong Kong
- Tariffs applied by Hong Kong as provided by ITC's Market Access Map, an online database of customs tariffs and market requirements.