ENG-1986 — Page 32

HONG KONG AS A PARTNER IN WORLD TRADE

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functioning of a civilised society. And, because of the efficiency of the taxation system in garnering revenue which has already been mentioned, it manages to raise and to spend over $40 billion a year in doing so.

The government or, through it, various organisations subvented from public funds, provides, for instance, free or heavily subsidised education from the primary level to university; free or heavily subsidised medical and health and hospital services; social welfare assistance to the old and the needy paid for from general taxation, and a vast network of public housing for roughly half the population. On top of these is a large and growing programme of public works, including water supplies, highways, railways, the building of six new towns for an eventual population of some 2.5 million people, the airport and the harbour. There are large programmes and activities covering recreation, culture and sports and the running of extensive country parks, as well as a growing network of pollution controls. Public utilities, such as electricity and telephones and the banking and securities industries, are regulated. Labour legislation has already been mentioned.

As regards industry, although the government does not seek to control its activities other than for safety, hygiene and the control of pollution, general assistance is provided in areas where individual firms cannot easily, or economically, provide it for themselves. For instance, there is a trade development organisation, the Hong Kong Trade Development Council, an Export Credit Insurance Corporation and a Productivity Council, as well as facilities such as a standards and calibration laboratory. Industrial training is also organised through a central body, with subsidiary bodies for various industries, each organised in collaboration with the industry concerned.

All these multifarious activities together, and others not mentioned, play their part in making Hong Kong a modern, forward looking, rounded and, as far as possible, a humane society. A lot of them are essential for the efficient working of the economy and are therefore in every way complementary to the activities of the private sector in producing goods and services. Together they make Hong Kong a free economy but certainly not one dedicated to the extremes of laissez-faire.

Conclusion

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The foregoing has tried to tell something of the story of how trade with the outside world, in all its forms, has been the major factor sustaining the economic life of Hong Kong for almost 150 years. The completely open nature of the economy means that it must continuously adjust to world market forces, both at the micro level of the individual firm seeking to sell its products at the best profit or to buy from the most advantageous and thus helping to use resources most effectively – right through to the macro level, where the whole balance of the economy adjusts to maintain equilibrium in external payments. It is this process, sustained consistently over many years, which has helped to bolster the economic development of the territory.

sources

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Naturally, as in any free economy, there have been ups and downs. There have been occasional bouts of excessive internal credit creation and speculation - the property booms of the early sixties and late seventies for instance – as well as external blows, particularly the world recessions of the mid-seventies and the early eighties. In each case, however, the economy has paused for adjustment and has then moved forward again, with trade leading the way.

Another feature that emerges clearly is that the economy has been sustained by trade in both directions, by imports as well as by exports. The greater part of its internal consumption and investment has been met by imported goods, its industries have depended

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