Hong Kong, with only 1100 ㎢ land, is regarded as the one of the most success country in global market. Although, to be exact, Hong Kong is the special administrative regions of China and isn’t independent country, because of the agreement ratified when Hong Kong was returned from U.K in 1998, Hong Kong is given high autonomy from mainland china by owning individual law system and, then, is seems as the virtually independent country in international business and economics; many international organization, such as the World Bank, World Economic Forums and World Heritage Organization investigate the country apart from China . Under the policy called “”One country, Two systems”, the country has free trade economy system based on laissez-faire policy since it was governed by UK and the preferable geographical location as the connection point of East and South-East Asia, Asia to Europe and Middle East, attracts foreign investment and business to Hong Kong. In this paper, I firstly mentioned about brief history of Hong Kong and the current economical situation and future prospect.
2. History of Hong Kong
Hong Kong played important role as transit point of global trading to connect European countries and Asian countries: mainly China since middle of 18th century. However, at this time, Hong Kong was the just transit point which connect Eropean and Chinese (Asian) market. However, after the embargo against China because of its sending of troop to Korean War in 1951, the export to China severely declined and Hong Kong start economic transferring from just transit point to high value-add trading point. In addition, once the flexible currency rate system started in 1973, Hong Kong emphasized attract foreign trade by allowing free capital flow and preferential taxation system; this policy attracted huge FDI from investment from foreign country and Hong Kong become the biggest stronghold of financial business in Asia for companies from Europe and U.S since then. In 1980s, once the mainland china opened it market, the economic discourse with mainland china became accelerated; mobility of goods and labor with china were accelerated and many Chinese companies started business in Hong Kong. Since then, China is the biggest trade partner both in export and import.(52% of export and 45% of import are from China in 2011) Successfully completing to built good business relationship with China, Hong Kong was ceded to China in 1997. The return itself was done relatively smoothly, however, Asian Crisis occurred in 1998 highly damaged its economy; the real growth rate dropped from 5.1% in 1997 to -5.1% in 1998. However, Hong Kong recovered from crisis relatively quickly by exceptional intervention by central bank and recorded positive growth rate in 1999. (Mariko Tanigaki, 2001, The Economic Movement of Hong Kong) After the crisis, Hong Kong concentrated on three domains as the new strategy: investment on IT industry and built economic Cluster called “Silicon Harbor”, investment on multi-media industry such as 3-D graphics and animation and emphasis on travel industry. Those strategy attracted huge amount of foreign investment and created new competitive industy in addition to financial services.
3. Current Economic and Government Situation
In international economy, Hong Kong is regarded as one of the most competitive country in the world. According to Global Competitiveness Ranking from World, Economic Forum, Hong Kong has been 11th out of 142 countries and it have kept that position since 2008.(See Appendix 1). According to the report, Hong Kong shows strong competitiveness in the area of “ Basic Requirement” and “Efficiency Enhancer”; especially, in the basic requirement section, the infrastructure is ranked the top and, in the efficiency enhancer section, financial market development is ranked as 2nd and both goods and labor market efficiency ranked 3rd.( Global Competitiveness Ranking 2011-12,2012,World Economic...
Cited: CIA World Factbook, Accessed August 21, 2012.
Hiroshi Inagaki, 2012, The Economic Forecast of Hong King after 15years from the return)
IMF World Outlook Database, 2012, Accessed August 21, 2012.
Mariko Tanigaki, 2001, The Economic Movement of Hong Kong
World Heritage Organization, 2012, Economic Freedom Index
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