ROZAMH
IX: THE HONG KONG ECONOMY
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1. For over a hundred years Hong Kong functioned as an entrepot, a free port, to facilitate trade between China and the outside world.
It found itself completely devastated at the end of the Japanese occupation and had, almost literally, to start again from scratch. The pieces were just being picked up when the Korean war and the United Nations embargo on trade with China devastated the entrepot trade, up till then the territory's main source of livelihood. the same time, its population was swollen by a huge influx of refugees from China following the Communist victory. The future
could not have appeared more bleak.
At
2. Yet, from this highly unpromising start, a complete transformation of Hong Kong's economy and society has been accomplished in only 40 years. The driving force has been rapid economic growth sustained for over a generation. Although precise figures are not available for the whole period, it is estimated that the Hong Kong economy is now some 15 times bigger than it was in the early 1950s. Taking account of population growth, output per head has grown sixfold over the same period. In the 22 years since 1966, when official accounts were first calculated, the Gross Domestic Product (GDP) has grown more than five and a half times in real terms, an average of over 8% each year in real terms.
3.
In
Following the opening of the Chinese economy at the end of the 1970s Hong Kong's trade and other economic links with China have increased rapidly. Previously, while Hong Kong had itself been a good and expanding market for Chinese exports and an important source of foreign exchange for the Chinese economy, it had sold little, if any, of its own domestic exports to China. This
situation has changed completely in less than a decade. particular, the growth of the re-export trade has enabled Hong Kong to resume its traditional role as an entrepot. Re-exports had
fallen to less than a fifth of Hong Kong's total exports in 1970 and
were still less than 25% in 1978: by 1988 they accounted for as much
as 56% of total exports. 80% of this trade involves re-exports to or from China. Hong Kong's own domestic exports to China also
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