Economy of Hong Kong

Economy Of Hong Kong

As one of the world's leading international financial centres, Hong Kong’s service-oriented economy is characterised by low taxation, near-free port trade and well-established international financial market . The currency, 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 market-driven only and in Hong Kong there is no Central Bank nor any financial system similar to the Federal Reserve System in the US (for more, see Exchange Bank Association) and foreign investments to the financial market in Hong Kong are supervised and inspected by the Hong Kong Monetary Authority when destabilizing factors attempt to hit the financial market of this Special Administrative Region of People's Republic of China. Electronic finance trading is evolutionarily impacting the financial market of Hong Kong. (see page 134~136)

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. In terms of international comparison, with the most efficient and corruption-free application procedure, lowest income tax and lowest corporate tax as well as abundant and sustainable government finance that the government of Hong Kong consistently upheld the policy of encouraging (and supporting) activities of private businesses and this is having a sound impact on the overall economic performance by removing unnecessary barriers for the private enterprises in the Special Administrative Region. Hong Kong is a favorable destination especially for international firms and firms from Mainland China to be listed in the Hong Kong Stock Exchange from Hong Kong's highly internationalized and modernized financial industry along with its capital market in Asia, its size, regulations and available financial tools are comparable to London and New York.

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 Ireland and its GDP per capita at purchasing power parity is the 6th highest globally in 2011, more than United States and 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 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. Prices and wages in Hong Kong are (relatively) flexible depending on the performance and stability of the economy of Hong Kong.

Taxation in Hong Kong raises revenues from the sale and taxation of land and taxation on the accumulative overall economic growth but not engaged directly in industry and commerce as well as individual(s) for its revenue of public finance due to its low tax policy. From its revenues, the government with the policy-making of Executive Council of Hong Kong under jurisdiction of Hong Kong Basic Law 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.