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The Economy
Structure and Development of the Economy
Hong Kong is a global centre for world trade, finance, business and telecommunications, strategically located at the doorstep of the Mainland's huge and vibrant economy. According to the World Trade Organisation (WTO), Hong Kong is the world's eighth largest trading entity in 2014. It operates one of the world's busiest container ports in terms of container throughput, as well as one of the world's busiest airports in terms of number of international passengers and volume of international air cargo handled. Hong Kong is also the world's seventh largest banking centre in terms of external positions in 2014, and the fifth largest foreign exchange trading centre according to the triennial survey conducted by the Bank for International Settlements in 2013. Its stock market is the third largest in Asia in terms of market capitalisation as at end 2014 and ranked number one in the region in terms of equity funds raised during the
same year.
As an international business hub, Hong Kong has a business-friendly environment with the rule of law, free trade and free flow of information, open and fair competition, a well-established and comprehensive financial network, superb transport and communications infrastructure, sophisticated support services, and a flexible labour market with a well-educated workforce and a pool of efficient and innovative entrepreneurs. In addition, Hong Kong has sizeable foreign exchange reserves, a fully convertible and stable currency, prudent fiscal management and a simple tax system with low tax rates. Thanks to these virtues, Hong Kong has been persistently ranked by the Heritage Foundation and the Fraser Institute as number one in the world in terms of economic freedom. As for competitiveness, Hong Kong was ranked the world's fourth most competitive economy by the International Institute for Management Development in 2014 and the third easiest place to do business globally according to the World Bank's Doing Business 2015 Report published in October 2014. Hong Kong's economic vitality is also well-recognised internationally, as reflected in the top triple-A credit rating conferred by Standard and Poor's.
The Hong Kong economy nearly doubled in size over the past two decades, expanding at an average annual rate of 3.4 per cent in real terms, and consistently faster than most high-income economies. Over the same period, Hong Kong's per capita GDP rose by about 60 per cent in real terms, posting an average annual growth rate of 2.5 per cent. Hong Kong's per capita GDP at current market prices reached US$40,000 in 2014, one of the highest in the region and the world (Chart 2).
Thanks to continued globalisation, the further deepening of regional trade integration and the government's sustained efforts in exploring new markets, Hong Kong's trade linkages with other parts of the world have grown appreciably. Trade in goods and services more than tripled in real terms over the past two decades. In 2014, the total value of goods trade (comprising re- exports, domestic exports and imports of goods) reached $8,350 billion, equivalent to 372 per cent of GDP. This was considerably higher than the ratios of 229 per cent in 1994 and 313 per cent in 2004. Including the value of exports and imports of services, the ratio of total trade to GDP was even higher, at 441 per cent in 2014, up significantly from 267 per cent in 1994 and 365 per cent in 2004.
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