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war, the entrepot trade dwindled rapidly. In its place, industry (based very largely on the skills and capital or overseas Chinese) assumed a dominant role.
5. Hong Kong is now firmly established as a light industry economy based on exports. It has retained and developed a considerable entrepot trade serving South East Asia and the Far East. It is the fifth largest port (basically a free port) in the world. The value of the Colony's trade in 1967 was $1,322 million, placing Hong Kong third amongst the trading countries of Asia and number twenty-five in the list of the world's trading countries.
6.
Without a substantial home market, Hong Kong's basically
It is industrial economy rests upon the opportunity to trade. and always will be very vulnerable in the event of any trade recession or the adoption of more protestionist policies by countries constituting its major markets. Although its growth is in part self-generated it continues to be heavily dependent on outside capital. The Colony is today entirely self-supporting; but it could become a major liability in the event of a world trade recession or of a crisis of confidence involving the cessation or withdrawal of external investment. It would seem
that such a liability must inevitably arise as its economy begins to run down towards the end of the lease in 1997.
7. Measured by exports, the annual growth rate in the economy has been of the order of 12-14% in recent years. There are no indications at present of a decline in this rate, but it may prove difficult to maintain. Apart from the factors affecting the expansion of its trade noted in paragraph 6 above, Hong Kong's competitive position can be expected to worsen (particularly vis-a-vis other low-cost Asian countries such as Taiwan and Korea) with the progressive introduction of Western concepts of labour legislation, e.g. shorter hours of work, and with steadily rising wage rates. It is reasonable to assume, however, that notwithstanding the high natural rate of increase and the need to provide employment for a substantial and rapid increase in the size of the working population, living standards could be maintained and improved at a lower rate of growth in the economy.
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