Hong Kong has a capitalist mixed service economy, characterised by low taxation, minimal government market intervention, and an established international financial market. It is the world’s 35th-largest economy, with a nominal GDP of approximately US$373 billion. Although Hong Kong’s economy has ranked at the top of the Heritage Foundation’s economic freedom index since 1995, the territory has a relatively high level of income disparity. The Hong Kong Stock Exchange is the seventh-largest in the world, with a market capitalisation of HK$30.4 trillion (US$3.87 trillion) as of December 2018. Hong Kong is the tenth-largest trading entity in exports and imports (2017), trading more goods in value than its gross domestic product. Over half of its cargo throughput consists of transhipments (goods travelling through Hong Kong). Products from mainland China account for about 40 per cent of that traffic. The city’s location allowed it to establish a transportation and logistics infrastructure which includes the world’s seventh-busiest container port and the busiest airport for international cargo. The territory’s largest export markets are mainland China and the United States. It has little arable land and few natural resources, importing most of its food and raw materials. More than 90 per cent of Hong Kong’s food is imported, including nearly all its meat and rice. Agricultural activity is 0.1% of GDP, and consists of growing premium food and flower varieties. Although the territory had one of Asia’s largest manufacturing economies during the latter half of the colonial era, Hong Kong’s economy is now dominated by the service sector. The sector generates 92.7 per cent of economic output, with the public sector accounting for about 10 per cent. Between 1961 and 1997 Hong Kong’s gross domestic product increased by a factor of 180, and per capita GDP increased by a factor of 87. The territory’s GDP relative to mainland China’s peaked at 27 per cent in 1993; it fell to less than three per cent in 2017, as the mainland developed and liberalised its economy. Economic and infrastructure integration with China has increased significantly since the 1978 start of market liberalisation on the mainland. Since resumption of cross-boundary train service in 1979, many rail and road links have been improved and constructed (facilitating trade between regions). The Closer Partnership Economic Arrangement formalised a policy of free trade between the two areas, with each jurisdiction pledging to remove remaining obstacles to trade and cross-boundary investment. A similar economic partnership with Macau details the liberalisation of trade between the special administrative regions. Chinese companies have expanded their economic presence in the territory since the transfer of sovereignty. Mainland firms represent over half of the Hang Seng Index value, up from five per cent in 1997. As the mainland liberalised its economy, Hong Kong’s shipping industry faced intense competition from other Chinese ports. Fifty per cent of China’s trade goods were routed through Hong Kong in 1997, dropping to about 13 per cent by 2015. The territory’s minimal taxation, common law system, and civil service attract overseas corporations wishing to establish a presence in Asia. The city has the second-highest number of corporate headquarters in the Asia-Pacific region. Hong Kong is a gateway for foreign direct investment in China, giving investors open access to mainland Chinese markets through direct links with the Shanghai and Shenzhen stock exchanges. The territory was the first market outside mainland China for renminbi- denominated bonds, and is one of the largest hubs for offshore renminbi trading. The government has had a passive role in the economy. Colonial governments had little industrial policy, and implemented almost no trade controls. Under the doctrine of “positive non-interventionism” Tourism is a major part of the economy, accounting for five per cent of GDP. In 2016, 26.6 million visitors contributed HK$258 billion (US$32.9 billion) to the territory, making Hong Kong the 14th most popular destination for international tourists. It is the most popular Chinese city for tourists, receiving over 70 per cent more visitors than its closest competitor (Macau). The city is ranked as one of the most expensive cities for expatriates.
From March 2019 to the present Hong Kong Special Administrative Region is in a situation of people protesting which many times there is violence. At the LegCo meeting on 16 October 2019, Hong Kong chief executive Carrie Lam announced the “Treasure Hong Kong: Our Home” policy through video tape recording. adheres to three principles: the principle of “one country, two systems”, an effort to protect rights and freedoms under “Basic Law”
The policy “Treasure Hong Kong: Our Home” is intended to solve problems that occur in the economic and social environment, including giving importance to management problems “housing”, “land” and “eating well” of people. The goal is to diversify the economy, cultivate talents and create more livable cities. Which can be summarized as
1. Improving People’s Livelihood Policy.
-Set aside $5 billion to increase the number of transitional housing projects substantially to provide a total of 10 000 units within the next three years
– Put up about 12 000 flats under the Home Ownership Scheme and Green Form Subsidised Home Ownership Scheme for pre-sale next year
– Propose HKHA to actively prepare for accelerating the sale of the existing 42 000 unsold flats in the estates under the Tenants Purchase Scheme
– Expedite planning work and then invoke the Lands Resumption Ordinance to resume three types of private land for developing public housing and SH:
-Raise the cap on the value of the properties eligible for a mortgage loan of maximum cover of 90% loan-to-value ratio from $4 million to $8 million for first-time home buyers under the Mortgage Insurance Programme of the HKMC Insurance Limited
– Re-plan the coastal development of Tuen Mun West, including exploring the feasibility of developing the coastal areas which also cover the River Trade Terminal into residential areas
2. Economic Diversification Policy.
– Extend the coverage of the Technology Talent Admission Scheme to companies outside the Hong Kong Science and Technology Parks Corporation and Cyberport and to cover new technology areas.
– Inject $500 million into the Social Innovation and Entrepreneurship Development Fund to further promote social innovation.
– Inject $1 billion into the Dedicated Fund on Branding, Upgrading and Domestic Sales and significantly increase the funding ceiling per enterprise under its Mainland Programme and Free Trade Agreement Programme to $2 million.
– Inject $1 billion into the Export Marketing and Trade and Industrial Organisation Support Fund to double the cumulative funding ceiling for each enterprise under the SME Export Marketing Fund to $800,000.
– Provide guarantee under the SME Financing Guarantee Scheme for approved loans
– Commence detailed planning and design for the Tung Chung Line Extension, Tuen Mun South Extension and Northern Link in order to commence construction early.