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THE ECONOMY
The Commodities Trading Ordinance provides a regulatory framework within which the Futures Exchange operates and dealers, commodity trading advisers and representatives conduct their business. It includes, inter alia, provisions for the maintenance of a Compensation Fund to compensate clients of any defaulting commodity dealer.
Companies transacting insurance business in Hong Kong are subject to the Insurance Companies Ordinance. The ordinance brings all classes of insurance business under a comprehensive system of regulation and control by the Registrar General (Insurance Authority). The carrying on of insurance business in or from Hong Kong is restricted to authorised companies, to Lloyd's, and to certain underwriters approved by the Governor in Council. All new applications for authorisation are subject to careful scrutiny by the Insurance Authority to ensure that only insurers of good repute who meet all the criteria of the ordinance are admitted. The ordinance stipulates minimum share capital and solvency requirements for all authorised insurers and requires them to submit financial statements and other relevant information to the authority on an annual basis. It provides that any person who is not considered by the authority to be a fit and proper person to be associated with an authorised insurance company cannot acquire a position of influence in relation to such company. It also empowers the authority to intervene in the conduct of the business of insurance companies in certain circumstances. Where the authority has a cause of concern it may take remedial or precautionary measures to safeguard the interests of policy holders and claimants, including the limitation of premium income, the restriction of new business, the placing of assets in custody, and petitioning for the winding-up of the company involved.
Hong Kong as an International Financial Centre
The favourable geographical position of Hong Kong, which provides a bridge in the time gap between North America and Europe, together with the strong links with China and the Southeast Asian countries and excellent communications with the rest of the world, has helped Hong Kong to develop into a significant international financial centre.
A total of 102 of the licensed banks are among the top 500 banks in the world in 1987, and 76 are ranked among the top 100. Most of the foreign banks in Hong Kong are international banks and are ranked top of the list in their own countries. In addition, many of the most important merchant banks or investment banks operate in Hong Kong. A substantial proportion of the transactions in the banking sector are international in nature; over 40 per cent of the sector's aggregate assets and liabilities are external, spreading over more than 80 countries. The financial markets, particularly in foreign exchange and gold, form an integral part of the corresponding global markets. Moreover, Hong Kong serves as an important centre for the intermediation of international flows of savings and investment, particularly through the syndication of loans and international fund management. Inter- national investors play a significant and increasing role in Hong Kong, and Hong Kong's investments overseas is also believed to be considerable.
Increasing Economic Links between Hong Kong and China
China's adoption of an open door economic policy since 1979 in support of its modernisa- tion programmes has given rise to increased economic links between Hong Kong and China which have had a significant impact on the growth and development of the Hong Kong economy.
The most conspicuous development has been the rising importance of China as a trading partner. From a relatively low base in 1979, Hong Kong's trade with China has grown by