Country Report
Hong Kong
Brief History
Prior to the arrival of the British, Hong Kong was a small fishing community and a haven for travelers and pirates in the South China Sea. During the Opium Wars with China in the Nineteenth Century, Britain used the territory as a naval base. Following the end of the first Opium War, the Treaty of Nanking ceded the territory to Britain in perpetuity. Following additional conflicts with the Chinese in 1860 Britain gained Kowloon and Stonecutters Island. In 1898 Britain acquired the New Territories on a 99-year lease. During the teens and twenties of this century, Hong Kong served as a refuge for exiles from China following the establishment of the Chinese Republic in 1912.
After Japan seized Manchuria in 1932 and the Sino-Japanese war broke out in 1938, China turned to Britain for supplies. As a result of this relationship, relations between Britain, Hong Kong and China became warmer. Throughout the late thirties, as Japan advanced into China, hundreds of thousands of Chinese took refuge in Hong Kong. To defend against the specter of Japanese attack, Britain began to further strengthen the territories defenses.
World War II again disrupted the social and economic life of Hong Kong. On December 8, 1941, Japanese aircraft bombed Kowloon and Japanese troops pushed the British defenders of the territory from Kowloon and the New Territories. On Christmas Day, 1941, the British army surrendered Hong Kong to the Japanese. U.S. submarines foiled Japanese plans to use Hong Kong as a staging area for assaults further into East Asia. Following Japan's surrender on August 14, 1945 Britain reclaimed the territory.
Following the war, Hong Kong was again a major trade center. However, the situation in China as the Nationalist/Communist Civil War broke out and the subsequent Communist victory in 1949 again led hundreds of thousands to flee to Hong Kong. After the 1950 US-led ban on commerce with Communist China, Hong Kong's economic life began to slow. The colony was forced to develop internal industries taking advantage of local and regional resources in order to continue to grow.
The constant influx from China of capital and manpower led to the establishment of light manufacturing throughout the territory by the 1950s and 1960s. At the same time, Hong Kong's tax policies began to attract growing foreign investment further adding to the territories rapid growth. The colony was again thrown into turmoil in 1967 as the Communists led riots throughout the spring and summer. The flow of refugees from Communist China continued unabated throughout the late sixties and into the seventies adding to the human resources in Hong Kong. During the 1980s Hong Kong started to work with China on a series of joint projects that brought the two closer together.
In 1984, Britain and China reached an agreement that Hong Kong would revert back to Chinese authority in 1997. The commercial, social and legal life of Hong Kong was to remain as it was until 2047 at which time China will be able to exercise its authority. Hong Kong is now known as the Hong Kong Special Administrative Region of China (HKSAR).
Economic Profile
| Year | 1996 | 1997 | 1998 (est.) |
| GDP | US$163.6 billion | US$172.6 billion | US$178.6 billion |
| GDP Per Capita | US$26,000 | US$26,500 | US$27,200 |
Average GDP growth (1996 - 1998) should be approximately 4.6%.
The Hong Kong economy was marked by two major events in 1997. They were the historic reunification with the mainland of China in July and the financial turmoil in East Asia since the middle of the year.
The bullish sentiment preceding the reunification took a distinct negative turn after late October, as the contagion effect of the regional financial turmoil intensified. It was expected that 1998 would be a year of adjustment and adaptation for the Hong Kong economy to the substantial currency depreciation and financial turmoil in East Asia.
Major imports: foodstuffs, transportation equipment, raw materials and petroleum.
Main partners: China. Japan, Taiwan, US, Singapore and South Korea.
Total US$ 217.2 billion (c.i.f.) 1996
Major exports: clothing, textiles, yarn, fabric, footwear, electrical appliances, watches, clocks and toys.
Main partners: China, US, Japan, Germany, UK and Singapore.
Total US$ 197.2 billion (f.o.b.) 1996
The country has an outstanding deep-water harbor and is also know for its feldspar.
For most of the past decade the unemployment rate has hovered at 2% with a high of 3.6% in October 1995, 2.8% in 1996, and 2.5% in the 4th quarter of 1997.
Total of 3.251 million (1996) out of a total population of 6.5 million.
By occupation: wholesale & retail trade and restaurants & hotels 34.4%, service industry 19.8%, manufacturing 14.2%, financing, insurance, & real estate 12.4%, transportation & communications 5.1%, construction 2.1% and others 12%.
The government has taken a non-interventionist approach to economic policy that stresses the predominant role of the private sector. There is a minimal interference by the government with market forces.
Hong Kong has been effective economically due to its free-market philosophy, entrepreneurial drive, absence of trade barriers, long established rules of law, low taxes, easy regulations, and freedom of capital movement. It has become an expensive place to do business lately due to rising property and labor costs, with residential rental costs among the highest in the world.
Hong Kong is a member of the Asia-Pacific Economic Cooperation (APEC) and Pacific Economic Cooperation Council (PECC) and an associate member of the Economic and Social Commission for Asia and the Pacific (ESCAP).
US$2.1 billion (7/98)
4.3% (7/98)
Political Profile
As a Special Administrative Region of China, Hong Kong has retained the same rights and freedoms they enjoyed as a dependent territory of the UK. Systems that were in place when the takeover occurred were to remain unchanged. Beijing is only responsible for foreign affairs and the defense of Hong Kong. The socialist system and policies will not be practiced in Hong Kong, but they will continue the capitalist system for 50 years from the takeover date in 1997.
Hong Kong has a free and open society. Politically, they are governed by a Chief Executive who must be a resident and can be elected or appointed by the Central People's Government (CPG). He is aided by the Legislative Council who are elected.
Hong Kong is politically stable and secure with a reputation for tranquility. There has not been any major political unrest in Hong Kong for over 30 years.
The only country bordering Hong Kong is China with its 30km border.
The country has the following religions: Buddhist, Taoist, Christian, a small number of Moslems, Hindus, Jews, and Sikhs. As a free society their impact would be much the same as those of the US.
After many years under the colonial administration of the United Kingdom, Hong Kong became a Special Administrative Region of China on July 1, 1997. It will retain a high degree of autonomy until 2047.