etc), 1% on economic services (airport, harbours, communications etc) and the remainder on miscellaneous items such as government pensions
and supplies etc.
Special Economic Factors
Hong Kong has no natural resources apart from its sheltered harbour, the only developed deep water port on the China coast, and its
industrious work force. There is little Government intervention
in the economy, except in the social and public works field, where its role is expanding. The Government's industrial land policy was
modified in 1973, orders being invited by international notification
for the sale of land for heavy industrial use. Previously land had
been auctioned for industrial use to the highest bidder. In June 1975
the Government announced its decision to construct the first of
several estates to provide specifically for heavier industries.
Work is continuing on the controlled expansion of three New Towns,
Sha Tin, Tuen Mun and Tsuen Wan, to the north and west of Kowloon.
rates:
Hong Kong is now an international financial centre, with a highly efficient communications and transport system. Low taxation is the principal stimulus for foreign investment, which the Government welcomes because of the capital, and the technical and managerial knowledge which it brings into the Territory. No distinction is made between local and foreign businesses for tax purposes. There has traditionally been an easy monetary policy involving low interest
prime lending rate for most of 1978 was between 4.75-6.0%, and against the background of strong economic activity the level of bank advances rose rapidly. In December 1978 advances were 43%
ahead of the December 1977 level, with loans for building and construction in particular having increased by 70%. Money supply rose 26%, and this trend appears to have continued during the first
half of 1979. The high level of domestic consumption and the construction boom have led to rapidly expanding imports, resulting
in a record trade deficit in 1978 and in a weakening of the Hong Kong Dollar. To counter this trend the prime lending rate was increased from 6% in November 1978 to a record 13% in April 1979. The present
high interest rates should create a significant reduction in the expansion of bank lending and therefore a slower rate of growth in the money supply. Recent figures have shown that the policy is proving
successful: money supply growth has, decelerated and the Hong Kong Dollar's decline has been arrested,
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