THE ECONOMY
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Economic Policy and Public Finance
Economic Policy.
Under the 'one country, two systems' principle, the Hong Kong Special Administrative Region shall continue to adopt social, economic and political systems distinct from those in the Mainland following the reunification in July 1997. The Basic Law, as the constitutional law of HKSAR, gives a firm protection to this principle. The HKSAR shall continue to uphold the rule of law, maintain an effective executive-led Government, sustain an efficient Civil Service, practise free enterprise and free trade, follow prudent financial management policies, and keep a simple and predictable tax system with a low tax rate.
Hong Kong has long been well-known for its market-led economic policies. Market-led means that the Government does not seek to direct or plan the course that the economy or the markets should take, as investors and entrepreneurs are deemed to understand markets far better than officials. Private sector initiatives are a surer way to build Hong Kong's prosperity than the bureaucrat's blueprints. The law of the market advances that the fittest survives. Economic vitality is thus the key to maintaining competitiveness and engendering prosperity. Proactive response to market forces will lead the economy towards lower cost, higher efficiency and better quality, thereby adding higher value to products and services. It is through the creation of better jobs and more rewarding business opportunities that people in Hong Kong can aspire to enjoy higher income and better standard of living.
The Government sticks to its rule of 'maximum support and minimum intervention'. Its primary role is to provide the most business-friendly conditions possible, including the fundamental 'software' of personal liberty, the rule of law, a clean and efficient administration, and a level playing field for all businesses, as well as the land and infrastructural 'hardware' such as schools, roads and airport that Hong Kong needs for its growth.
In addition, the Government has a special responsibility for removing market restrictions and promoting fair competition. It has made considerable strides in liberalising the securities, futures and banking industries, and opening up the telecommunications, information technology and broadcasting markets. The increased competition has not only brought in more participants, both local and foreign, but also stimulated businesses in Hong Kong to raise their stake both at home and abroad. Most of all, consumers benefit from better quality of service and lower prices.
Furthermore, the Government has the responsibility to protect and promote Hong Kong's commercial interests in the international arena. It does this through its representation in such international fora as the World Trade Organisation and the Asia-Pacific Economic Cooperation, and by negotiating and entering into bilateral arrangements such as those for air services.
The Basic Law also stipulates that Hong Kong shall maintain its status as an international financial centre. The past decade saw remarkable growth in Hong Kong's financial services in banking, insurance, securities trading and fund management. The Government will strive to continuously enhance Hong Kong's position in this regard, by maintaining a world-class supervisory regime without over-regulation, by providing the most up-to-date financial infrastructure and a