4
HONG KONG AS A PARTNER IN WORLD TRADE
most exports were entrepôt trade. By 1963, domestic exports accounted for more than three quarters of total exports and the figure rose to more than four-fifths in the early 1970s.
The early stages of industrial development were far from sophisticated. The most important enterprises were the new spinning and weaving mills making cotton yarn and grey cloth. There were also some workshops producing cheap, down market, garments and a range of other small factories turning out products such as plastic flowers and other simple plastic goods, rubber footwear and enamelware. They were soon followed by cheap electrical and metal products, such as flashlights and batteries, fans and accessories such as electrical fitments and the early beginnings of the toy industry.
Although the production and exports of these industries grew rapidly during the fifties and early sixties and they quickly began to absorb the pool of largely immigrant labour, the whole process had to begin almost from scratch and markets carved out where they could be found, most of them thousands of miles away. The process was not easy and it was not, at the time, inevitable. Certainly it was not planned. But it did depend on a fortuitous coming together of circumstances and a seizing of opportunities.
Land Constraint
A crucial constraint which has done much to shape the development of Hong Kong industry is the shortage of land. It is not the total land area which imposes the constraint, but its configuration. The greater part of the land area, including the whole of the centre of Hong Kong Island itself, is very hilly and unsuitable for development. Much of it is also required for water catchment areas to feed the reservoirs and a goodly part consists of offshore islands. The amount of land suitable for development and intensive use is, therefore, strictly limited, and a considerable part of what there is has had to be reclaimed from the sea. The greater part of the population lives and works in the urban area stretching all round the harbour and back to the Kowloon foothills, or in six new towns in the New Territories. Virtually all the industry is also in these areas.
The consequence is not only that there is very little, if any, heavy industry in Hong Kong. There is also very little industry that cannot operate in flatted factories in high rise buildings. This has meant that industrial development has largely been confined to light industry, much of it relatively labour intensive. There are special provisions for essential public utilities, such as the electric power stations, and elaborate arrangements to accommodate certain other carefully chosen enterprises that cannot operate in high rise buildings. But, for the most part, industrial land is allocated strictly by the price mechanism, and is auctioned or tendered to the highest bidder. The resulting price ensures that it is only economic to develop high rise.
Into Self-sustaining Economic Growth
It was in the early sixties that the process of transforming Hong Kong into a modern city state really began to take off. It was not just that, by 1963, total exports had recovered to exceed the 1951 level or even that, by then, a state of more or less full employment had been achieved and real wages had begun to move sharply upwards. It was also in this period that the process of physical transformation of the territory, which has since continued almost unabated for a quarter of a century, really made a start. The beginning was probably the change in the building regulations in 1959, which permitted much higher plot ratios than before and thus the construction of high-rise buildings. The first building boom followed, together with the appearance of the first truly modern buildings, including the Hong Kong Hilton and Mandarin hotels.