Hong Kong is an autonomous Island governed under the system of one country, two systems. This explains its nature as a territory of China, controlling its economy without any interference from China. China though has the power to veto changes concerning the political system. The island was handed back to China from Britain in 1997 after China had leased it in 1898. Hong Kong enjoys a high standard of development in Media, Information Technology, and infrastructure. Over the years, Hong Kong has witnessed rapid economic growth. The island has a low tolerance to corruption which calls for accountability and transparency for those in power. Adequate protection of property protected under the legal framework is another prerequisite for robust economic prosperity.
This report highlights the various economic achievements made in Hong Kong over the last 30 years. Trade is a great contributor to the growth of Hong Kong with tariff rate standing at zero percent. The island is very open to global trade and investments with foreign banks operating on equal ground as the domestic financial institutions. Price controls are also very few.
Main economic sectors
The Heritage Foundation has ranked Hong Kong as the world’s freest nation for nine consecutive years (1995-2003) (Meyer, David R p19). Real GDP growth for the period 1992-2002 has averaged 3.6% with the per capita GDP in 2002 above US$ 24000 coming second after Japan in Asia. Mainland China remains a key contributor to the economy of Hong Kong, with a cumulative direct investment amounting to US$123 Billion as at 2002(Meyer, David R p17). Recent years has witnessed growth in domestic demand which contributes to economic expansion. Hong Kong and China signed an agreement in 2014 on achieving essential trade services in Guangdong Province under the umbrella of Closer Economic Partnership Agreement, effective since 2003 to foster closer ties between Mainland China and the Island of Hong Kong.
Credit expansion coupled with tight housing supply has escalated Hong Kong property prices with consumer prices shooting to 4.4% in 2014 but slowed to 2.9% the following year(Craig, R. Sean, and Changchun Hua p41). The banking and finance between the two partners has witnessed massive achievements. The Hong Kong-Shanghai Stock Connect is an example of this co-operation. The real GDP was valued at US$ 309.23 Billion as at 2015 compared to a record low of US$ 1.32 Billion in 1960(So, Alvin Y p63).
Hong Kong per capita PPP for the period 1990-2015 averaged US$ 39028.47 with an all-time high of US$ 53463 recorded in 2015.
The inflation rate in Hong Kong has always been low averaging 4.45% for the period 1981-2017, with an all-time low of -6.10% recorded in August 1999(Lui, Hon-Kwong p30).
With inflation in other parts of the skyrocketing, Hong Kong has continued to indicate positive economic growth. Hong Kong enjoys a low unemployment rate at an average of 3.70% for the period 1987-2017, with a high of 8.59% in June 2003(Lui, Hon-Kwong p27). The lowest inflation recorded at an impressive low of 1% in July of 1989.
Hong Kong is a model economy which other nations should emulate. The success is attributed to good leadership principles of statehood and an excellent legal system that sets the guidelines to realize a healthy business environment. A free trade market attracts investors for the benefit of the economy and the people of Hong Kong.
Meyer, David R. Hong Kong As A Global Metropolis. 1st ed., Cambridge, Cambridge University Press, 2000
Craig, R. Sean, and Changchun Hua. Determinants Of Property Prices In Hong Kong SAR. 1st ed., [Washington, D.C.], International Monetary Fund, 2011
Lui, Hon-Kwong. Widening Income Distribution In Post-Handover Hong Kong. 1st ed., Hoboken, Taylor And Francis, 2013
So, Alvin Y et al. The Chinese Triangle Of Mainland China, Taiwan, And Hong Kong. 1st ed., Westport, Conn., Greenwood Press, 2001