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HONG KONG ECONOMY
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Background
1. Apart from its industrious labour force and magnificent natural harbour, Hong Kong has no natural resources. Although it continues to function as an entrepôt, its economy depends primarily on the manufacture of goods from imported raw materials, for export principally to the United States and Europe (Hong Kong ranks as the sixteenth world trading power). In the early 1950s Hong Kong mamufactures were very often cheap, being based on low wage rates, but wages are now considered to be the second highest in Asia (after Japan). The standard of living of workers has risen steadily and methods of production are increasingly becoming highly capitalised.
2. Textiles, which account for over 50% of total exports, are the mainstay of the economy. In 1975 overseas sales of garments, the biggest single export commodity, rose by 16% to over HK$10,000 million. This increase helped to mitigate the dwnturn in demand for some of the other major exports. Reliance on textiles as a major economic base is a cause for concern, not least because 65% of textile exports are subject to quota restrictions in importing countries. But Hong Kong is also the world's leading exporter of toys and a new HK$100 million polystyrene plastic manufacturing plant, due to come into operation this year, is expected to provide the industry with a chap domestic source of raw materials and thus reduce expensive imports from Japan.
3. Hong Kong's export orientated economy is very sensitive to fluctuations in world demand and the world trade recession in 1974-75 hit Hong Kong hard. At the end of 1974 the economy was operating well blow capacity: there was a considerable increase in mnapployment (now thought to have reached 12-14%, a decline in
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