2
REVIEW
the private or the public sector. Public works and civil engineering projects approved or under construction in 1982 in value exceeded those in those in the United Kingdom at the same period.
But what was the secret behind the success? What was the driving force behind all the activity and growth, and what were the essential conditions that fostered success? There has been no lack of speculation on how this economic success, hailed as miraculous by some and perverse by others, has occurred.
A Geographical Accident
There is no doubt but that the accident of geography had something to do with it, allowing 'that barren rock' to become not merely the entrepôt of the China trade, but at the same time one of the most active trading cities in the world, and indeed the financial capital of Asia.
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Hong Kong's position and its relationship to China has played no small part in its growth a part that will surely increase as the programme of 'the four modernisations' advances. In the quinquennium 1976–81, the value of domestic exports to China multiplied over 120 times, from $24 million to $2,924 million; in 1981 China was also by far the largest source of goods re-exported from Hong Kong: 31 per cent of the total value of re-exports were goods originating in China, a 53 per cent increase in the year. China too was by far the largest market for the re-export of goods emanating from other countries, 19 per cent by total value, a rise of 73 per cent in that year.
But despite that huge growth, the China trade nevertheless remained only a small part, some five per cent, of the world-wide base upon which Hong Kong's commerce rested in 1981. In that year, despite the economic troubles which beset the world in general and Hong Kong's major United States and European Economic Community markets in particular in the late '70s and early '80s, in real terms domestic exports rose by 7.6 per cent to total $80,500 million, and re-exports by 24 per cent, so that total exports rose some 12 per cent. Again GDP rose by almost 10 per cent and, at a time of world recession, unemployment was only 3.7 per cent of the labour force.
Though the figures for 1982 are not available at the time of writing, it appears likely that the detailed picture for that year will be different, for Hong Kong has not been isolated from a world depression of a severity unprecedented for over 50 years. Exports have declined in real terms, and government revenue has done so too. But Hong Kong appears to have held its end up better than most places: an estimated rise in GDP of some four per cent, though poor by recent standards, nevertheless is better than the minimal or negative growth shown in so many other economies, leaving Hong Kong as one of the few growth markets in the world in 1982. Equally important, though unemployment has risen slightly, fortunately it remains far less than half the double digit figures seen in so many other places during the year for the style of the Hong Kong business community in hard times, both employers and employed, is to accept under-employment rather than to create unemployment.
So that happy accident of geography undoubtedly has played its part; nor has it exhausted its gifts. Situated midway between Peking and Indonesia, halfway between Tokyo and India, with Californian financiers ending their day's work as Hong Kong hurries to the office, and London financial markets opening as those in Hong Kong close, the territory is well placed to benefit as much in the decades ahead as it has in the past from the opportunities given by its fortunate geographical position. As was remarked at an International Arbitration Conference held in Hong Kong in 1982: