HONG KONG: A HARD-EARNED SUCCESS
the border into Guangdong, there was some pressure for us to intervene. Rules were suggested that would protect our factories from those in southern China, in the event of a downturn. But the pressure was half-hearted because our attitude was so well-known, and generally accepted. We, of course, did not intervene. We have always resisted going down that slippery slope, and it is essential that we should continue to do so. We shall only flourish if we allow outsiders free rein to operate on equal terms with established businesses.
We have of course been fortunate that this overall approach has fitted in so well with the flexible trading and entrepreneurial instincts of Hong Kong people, who are well used to constantly adapting to changing market needs. Our entrepreneurs' willingness to take risks has been reinforced over the years by the high success rate of their endeavours and by our low tax policies, to such an extent, I believe, that Hong Kong is one of the last strongholds of a valuable species in danger of dying elsewhere the decisive, risk-taking, capitalist businessman. Long may he continue to flourish here, to the benefit of the whole community! We have also been fortunate in enjoying virtually full employment for years, and to have no large-scale basic industries or large purpose-built factories to protect, apart arguably from the textile and garment industries. (Thus, the problem has not been protecting our own textile and garment industries, which are well able to compete without such aids, but gaining access to others' protected markets, whose 'temporary' protection by quotas has been extended again and again. Now, hopefully, following the Uruguay Round, such quotas are to be phased out.)
Because our policy has been seen to be successful, we have not come under the sort of pressure to protect old industries and jobs which often leads other economies into protectionist policies. The manufacturing sector in Hong Kong has, of course, not been static. Over the years, we have seen various industries rise and fall, and new product lines continue to emerge. Even the textile and clothing industries, the mainstay of our manufacturing sector, have declined in relative importance. We have also seen declines in such traditional industries as plastics (though we were still the largest exporter of artificial flowers in 1992) and footwear. Against this, industries producing toys, watches and a variety of electronics products have grown in significance. Now, services are to a great extent supplanting goods, though there will continue to be a successful and increasingly sophisticated manufacturing sector. The point is that we have allowed this to happen, and not attempted to rescue the various industries as they died from natural causes.
A New Trading Pattern
Hong Kong's buoyant economic performance over the past decade has increasingly enabled us to pursue these policies with considerable success, despite the severe constraints on our supply of land and labour. I have already drawn attention to some of the indicators of our success, including our dramatic ascent in the ranking of world trading economies, from 23rd in 1966 to the eighth largest overall at present.
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That is so dramatic that it often eclipses other far-reaching changes in our economy and in the pattern of our trade; in particular, China has replaced the USA as our largest trading partner, and we have undergone a major restructuring of our economy, with the emphasis shifting from manufacturing to services.
In 1966, our trade with the USA totalled $3.2 billion and with China $2.8 billion. By 1994, the position had reversed and China trade led with $855 billion, well ahead of the
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