THE ECONOMY
finance, business and communications. Hong Kong is now ranked the 10th largest trading entity in the world. It operates the busiest container port in the world in terms of throughput, as well as one of the busiest airports in terms of number of passengers and volume of international cargo handled. In addition, it is the world's 12th largest banking centre in terms of external banking transactions, and the seventh largest foreign exchange market in terms of turnover. Its stock market is Asia's third largest in terms of market capitalisation.
Hong Kong is characterised by a high degree of internationalisation, business- friendly environment, rule of law, free trade and free flow of information, open and fair competition, well-established and comprehensive financial network, superb network of transport and communications infrastructure, sophisticated support services, and a well-educated workforce complemented by a pool of efficient entrepreneurs. Added to these is the substantial amount of fiscal reserves and foreign exchange reserves, a fully convertible and stable currency, and a simple tax system with a low tax rate. On these virtues, Hong Kong is widely regarded as amongst the freest and most competitive economies in the world. The US Heritage Foundation ranks Hong Kong as the world's freest economy for the ninth year in a row in 2003. The Fraser Institute in Canada and the Cato Institute in the United States, in conjunction with a network of independent research institutes in 54 other countries, also consistently rank Hong Kong as the world's freest economy. The World Economic Forum, based in Switzerland, ranks Hong Kong as the fourth most competitive economy in Asia and the 17th in the world (Chart 1).
Chart 1
Per cent
15
10
-5
-10
5
Gross Domestic Product (year-on-year rate of change in real terms)
GDP
Per capita GDP
40
1982 1984 1986 1988
1990 1992 1994 1996 1998 2000 2002
Over the past two decades, the Hong Kong economy grew by an average of 5.1 per cent in real terms, outpacing the corresponding growth rate of 2.8 per cent for OECD economies as a whole. In 2002, the economy rose by 2.3 per cent in real terms, up from a 0.5 per cent growth in 2001.