The Economy
13. The management of the economy is based on commitment to
market mechanisms and free enterprise
14. In the ten years ending 1981 the growth rate of the GDP
in real terms was 10.1%. The growth rate of real income
per capita was affected by the high growth rate of population
in 1978-80. Nevertheless, as a result of a growth rate of
7.4% in the 1970s, real income per capita by 1981 was more
than twice that in 1971 (giving Hong Kong the highest
per capita income in Asia, other than Japan).
15.
About 90% of manufacturing output is exported and
domestic exports of goods (HK $80 billion in 1981) are
equivalent to 60% of the GDP (HK $135 billion in 1981).
The economy's growth record has been achieved despite its
vulnerability to external forces outside its control.
Public Finance
16.. The principle underlying the management of the public
finances is that the growth rate of expenditure should have
regard to the growth rate of the economy.
17. To this end, budgetary policy requires that a balance
is achieved between revenue and expenditure, having regard
to the need to accumulate fiscal reserves in line with the
growth of expenditure. Fiscal policy requires that the tax
system is neutral in economic terms and, because it is
/narrowly
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