Economy of Hong Kong

The economy of Hong Kong is widely believed to be the most economically free in the world. It has often been cited by economists such as Milton Friedman and the Cato Institute as an example of the benefits of laissez-faire capitalism.While the government, both under British and Chinese rule, has occasionally intervened in the economy, the free market policy of Positive non-interventionism espoused by former financial secretary John James Cowperthwaite still largely drives economic policy today.

Macro-economic trend

This is a chart of trend of real gross domestic product of Hong Kong at constant market prices [1] by the International Monetary Fund with figures in millions of Hong Kong Dollars.

After a slump caused by the regionwide Asian financial crisis that began in 1997, Hong Kong's economy had been on the rebound. Real GDP growth was 4% in 1999 and reached double digits in the first half of 2000. However, the dot-com bubble in the second half of 2000, the 9/11 terrorist attacks upon the United States in 2001 and the SARS outbreak in 2003 had severely damaged the economy of Hong Kong. In 2004 and 2005, real GDP grew by 8.6% and 7.3% respectively.

After peaking at 6.3% in 1999, the unemployment rate eased back to 4.8% in mid-2000. As of October 2005, the unemployment rate was 5.3%, with an underemployment rate of 3.0%.

In August 1998, the government intervened in the stock, futures, and currency markets to fend off "manipulators." The banking sector remains solid, and the government is committed to the U.S.-Hong Kong dollar link.

Hong Kong's Victoria harbour has facilitated rapid development of foreign trade. Hong Kong's principal trading partners include Mainland China, the United States, Japan, Taiwan, Germany, Singapore, and South Korea.

Hong Kong enjoyed economic growth in the past because of its strong manufacturing sector, but in recent years the service sector has surpassed it in importance and now accounts for 85% of GDP. The major components of Hong Kong's service trade are shipping, civil aviation, tourism, and various financial services. Hong Kong has one of the world's most sophisticated telecommunications and information technology infrastructures and functions as a major regional and international financial and commercial center.

GDP: purchasing power parity - $227.3 billion (2005 est.)
GDP - real growth rate: 7.3% (2005)
GDP - per capita: purchasing power parity - $32,900 (2005 est.)
GDP - composition by sector:
agriculture: 0.1%
industry: 9.2%
services: 90.6% (2005 est.)

Population below poverty line: NA%
Household income or consumption by percentage share:
lowest 10%: NA%
highest 10%: NA%

Inflation rate (consumer prices): 0.9% (2005 est.)

Labour force: 3.61 million (Oct 2005 est.)
Labour force - by occupation: wholesale and retail trade, restaurants, and hotels 31%, financing, insurance, and real estate 13%, community and social services 11%, manufacturing 7%, transport and communications 6%, construction 2%, other 30% (2001 est.)
Unemployment rate: 4.9% (July 2006 est.)

Budget:
revenues: $31.31 billion
expenditures: $32.3 billion, including capital expenditures of $5.9 billion (2005 est.)

Foreign Currency Reserve Assets: $972.32 billion (December 2005 est.)

Total assets of the Exchange Fund including the Foreign Currency Reserve Assets: $1068.9 billion (December 2005)

Primary industry

Agriculture and fisheries are the only primary industry in Hong Kong.

Agriculture and fisheries

Main articles: Agriculture in Hong Kong and Fisheries in Hong Kong

Hong Kong has little arable land and virtually no natural resources, including water for agriculture. Agriculturally, it is less than 20% self-sufficient. Hong Kong used to be fishing villages, thus fishing is a key local industry.

Main produce: fresh vegetables; poultry, fish, pork

Secondary industry

Secondary industry in Hong Kong includes textiles, clothing, electronics, plastics, toys, and watches and clocks

Industrial production growth rate: -9% (2001 est.)

Electricity - production: 29,449 GWh (2000)
Electricity - production by source:
fossil fuel: 99%
hydro: 1%
nuclear: 0%
other: 0% (2000)
Electricity - consumption: 35,402 GWh (2000)
Electricity - exports: 1,181 GWh (2000)
Electricity - imports: 9,195 GWh (2000)

Tertiary industry

Hong Kong is a center for the tertiary industries of finance and legal services.

Tourism

See Tourism in Hong Kong

Trade and investment

Exports: $286.3 billion f.o.b., including reexports (2005)
Exports - commodities: clothing, textiles, footwear, electrical appliances, watches and clocks, toys, plastics, precious stones
Exports - partners: Mainland China 43%, Japan 12%, Taiwan 8%, US 7%, South Korea 5%, Singapore 3% (2000)

Imports: $291.6 billion (2005)
Imports - commodities: foodstuffs, transport equipment, raw materials, semimanufactures, petroleum; a large share is reexported
Imports - partners: Mainland China 41%, Japan 13%, US 8%, Taiwan 7%, South Korea 5%, Singapore 4% (1998)

Debt - external: $72.04 billion (2005)

Economic aid - recipient: none

Currency

Main article: Hong Kong dollar

1 Hong Kong dollar (HK$) = 100 cents

Exchange rates: Hong Kong dollars per US dollar - 7.759 (April 2006) , 7.799 (April 2005), 7.798 (January 2002), 7.7994 (2001), 7.7918 (2000), 7.7589 (1999), 7.7462 (1998), 7.7425 (1997); note - the Hong Kong dollar is linked to the US dollar at a rate of about 7.8 Hong Kong dollars per US dollar

Fiscal year: 1 April–31 March

See also

• Positive non-interventionism

External links

• Hong Kong Government
• The Hong Kong Experiment by Milton Friedman

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