& to
CONFIDENTIAL
THE ECONOMIC SYSTEM OF HONG KONG
1. Hong Kong is completely dependent on trade. With no natural
resources except its harbour, the Territory must export in order to finance imports of both raw materials and consumer goods.
2. Hong Kong has important rights under the General Agreement on
Tariffs and Trade (GATT) because the United Kingdom is a founder
member. The Territory thus has most-favoured-nation status in the
markets of all contracting parties. The link with the UK is an
important factor in guaranteeing that these rights will continue.
3. Because of Hong Kong's beneficiary status under the generalised
preference schemes of many developed countries, its imports into
those countries often receive duty free treatment or individual
lower rates of duty. Such status was recognised on a multi-national basis after its initial such recognition by the EEC Generaliseḍ
Preference Scheme.
4. Hong Kong's achievements in exporting, and its development as an international financial centre have been fostered by an open business environment with an internationally recognised and impartially administered legal system.
The Territory's dependence
on trade means a limited role for discretionary policy changes, and
HKG's aim of non-intervention leaves decision-making in business to
those who bear the risks.
Predictable economic policy and low tax
rates have encouraged an internationally mobile professional class to use the Territory as a base. Continued success requires
confidence that the nature of the Territory will remain more or less
unchanged so that investment in Hong Kong's industry will
continue.
CONFIDENTIAL
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Rok Thund
withiel
02/11