Hong Kong's Economy and Public Finances
To deal with the Hong Kong economy and public finances in some twenty minutes is an impossible task. What follows can therefore be no more than an outline sketch, but I will try to cover as much as possible.
2.
First, we must understand the extent to which Hong Kong's economy is influenced by its geography and its history. Almost 41 million people live in 400 square miles of territory, but most of this is mountainous or consists of offshore islands not suitable for development. In practice, more than 3 million people are crowded round the harbour - and the harbour is indeed almost Hong Kong's only natural resource and a main reason for its establishment 134 years ago as an entrepot for British trade with China.
3.
An entrepot is, almost by definition, a free port and, from its earliest days, Hong Kong has had no protective tariffs or other impediments to trade and no restrictions on the free movement of money in and out. Its trading function also led to the development of commercial, banking and insurance facilities, as well as good shipping and other communications links with the rest of the world.
4.
When the entrepot trade was severely curtailed after the communist takeover in China in 1949, and the population swelled with the influx of immigrants, the development of industry was assisted by the commercial, financial and communications network already available. And, because of the free port and the small size of the territory, the only viable industry was that geared to export markets.
5.
Now, some 25 years later, there has been a vast transformation. The economy has grown about 15 times in real terms and the standard of living of the average working class family has trebled. Hong Kong exports more