HONG KONG: A HARD-EARNED SUCCESS
million workers (equivalent to about half of Hong Kong's total population) are now employed directly or indirectly by Hong Kong companies in Guangdong's manufacturing activities. This transformation has been achieved without the large-scale unemployment problem normally associated with such economic restructuring.
What lies behind all these impressive achievements? What is it that has turned this cluster of hills and islands on the southern tip of China into a world-famous example of entrepreneurial success? What lessons can we learn for the future, so that Hong Kong can continue to be a world leader in economic terms in the years ahead?
Hong Kong's Strengths
Our success stems fundamentally from the people of Hong Kong, whose entrepreneurial dynamism, innovative skills and sheer hard work have made it all possible. Then, too, we have an unbeatable geographical location on the southern tip of China, at the trading crossroads of Asia, with a deep natural harbour.
But these traditional explanations are not, of course, the whole story. These assets alone are not enough to explain our success. They need an administration which allows them to flourish. It would not be difficult to squander such excellent resources and hinder adaptation to change through heavy-handed policies which deter enterprise with heavy taxation and restrictive regulations. Or, through failing to make timely investments in education, transport and communications, and in all the other infrastructure which enables business to flourish.
We have a clear philosophy, consistently applied, which is based on a commitment to market forces, free enterprise and free trade. We believe in creating an environment with minimum government regulation and interference, plus maximum government support in terms both of infrastructure and of protection for the needy, leaving business free to flourish. And that belief is strengthened by our own experience of how well such an approach has actually werkzetk I would underline here, also, the key importance of the rule of law and of combating corruption: business needs a stable and predictable environment in which contracts are observed, and a satisfactory and respected system for resolving disputes.
We also believed, long before it became fashionable, that the private sector should provide essential public services wherever feasible with minimum government interfer- ence and at prices set by market forces. As a result, almost all our public transport and utility services are provided by private sector companies, operating on a fully-commercial basis without any subsidy from public funds.
Mode
Our reluctance to interfere with management in the private sector has not, however, prevented us from stepping in, when necessary, to regulate in the public interest. For example, we responded to rising public concern about the cost of electricity and the performance of the power companies by drawing up schemes of control agreements with China Light and Power Company Limited in 1964 and Hong Kong Electric Company Limited in 1979. These agreements, which were recently renewed, aim to provide a balance between the obligations of the companies and the government. The companies agree to provide adequate power supplies at reasonable cost to all consumers in their supply areas, and to submit their development plans to the government for approval. For its part, the government has given assurances about the rate of return that the companies can be allowed on their investments. We have also been ready to introduce new forms of regulation as
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