10. The second period of Hong Kong's economic growth, the decade
from the mid-1960's to the mid-1970's, was one of greater political
and economic turbulence. It opened with a banking crisis in 1965
which brought to an end the first property boom. This was followed
by the so-called 'Star Ferry' riots of 1966 and then by the
disturbances of 1967 when the Chinese Cultural Revolution spilled over into Hong Kong. A measure of recovery into the early seventies produced a phenomenal stock exchange bubble which burst spectacularly in 1973. Thereafter, the world oil crisis began to affect Hong Kong's economy and trade, leading at first to rapidly rising inflation and then to a sharp recession as export growth was
halted by slumping world markets. Nevertheless, over the decade as
a whole, exports and with them the whole economy continued to grow at a rapid pace, fuelled by increasing investment in plant and machinery, new factory buildings and an increasing labour force. Both exports and GDP more than doubled in real terms.
11. In 1976, Hong Kong recovered from the world recession more quickly than most other econimies and began another period of rapid expansion with a renewed surge in trade. This commenced the third period in the story, which lasted until 1982-3 when the next world recession, following the second oil price shock, combined with the political uncertainties accompanying the Sino-British negotiations on the future of Hong Kong, to shake the economy.
12. The years from 1976 to 1982 witnessed a more rapid growth in the output of the Hong Kong economy than any other previous period. Not only did the volume of trade continue to grow rapidly, but new industries based on electronics began to play an increasing part. The services sector also became more significant, particularly tourism, shipping, aviation and telecommunications. During this period, too, Hong Kong emerged as a major international financial centre. There was a surge in building and construction activity and a rapid rise in land prices, accompanied by an equally rapid increase in credit and considerable speculation. Towards the latter part of the period the economy was subject to significant
overheating and infationary pressures.
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