ENG-1994 — Page 31

HONG KONG: A HARD-EARNED SUCCESS

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The new Hong Kong International Airport at Chek Lap Kok will handle 35 million passengers a year on opening 70 times the number of tourists who visited Hong Kong in 1966. An estimated 1.6 million tonnes of cargo will be handled annually, making the new airport one of the busiest in the world.

With a population of about 70 per cent of that of Tokyo and a geographical area about 1.3 times the size of New York city, Hong Kong has undergone other no less dramatic changes during this period:

• Our economic growth, averaging over seven per cent a year in real terms, has resulted in our GDP per capita exceeding that of Britain, Canada, Italy and Australia. In terms of actual buying power, our GDP per capita is ranked the sixth highest in the world. In money-of-the-day terms, our GDP broke the $1 million mark for the first time in 1994.

• We are the world's eighth largest trading economy, ranked just after the Group of Seven industrialised economies.

• We have grown into a major transport and communications centre. We are the world's busiest container port. The world's third busiest airport. We have the world's first fully- digitalised telephone system and the most comprehensive optical fibre network.

• We have transformed ourselves from a small manufacturing enclave to an international financial centre. Our stock market is Asia's second largest in terms of market capitalisation. We have the world's sixth largest foreign exchange market in terms of daily turnover.

Others seem to agree we are doing well. Nineteen hundred and ninety-four saw a number of accolades for Hong Kong. The Heritage Foundation of the United States of America put Hong Kong at the top of a world league table in terms of 'economic freedom'. Fortune magazine chose Hong Kong as the 'best city for business', followed by such famous centres as New York, London, Atlanta, Chicago, Singapore, Toronto, San Francisco and Frankfurt. And the World Competitiveness Report 1994 (published by the International Institute for Management Development and the World Economic Forum) ranked Hong Kong as the fourth most competitive economy in the world, after the United States, Singapore and Japan. The benefits of this success have been passed on to the community as a whole. Real wages have increased, year after year. And, for the less fortunate, our growing wealth has enabled us to implement major improvements in our social services. For example, in 1966, recurrent spending on social welfare accounted for less than two per cent of total government recurrent expenditure. By 1994, it had grown to nearly 10 per cent. Indeed, nearly half of the total public spending in Hong Kong is devoted to housing and the social services, a figure higher than that of many developed countries.

All this has been achieved while ensuring that government expenditure does not increase faster than economic growth -

- a deceptively simple guideline that has dramatic results if applied consistently, year after year. We are an outstanding example of 'small government'; public spending runs at less than 20 per cent of the GDP, whereas in developed economies the percentage would typically be double that figure.

Such rapid growth in so many areas requires an ability to adapt flexibly and constructively to change. Here Hong Kong excels. Perhaps the most graphic illustration of that is the way in which we have adjusted to the opening up of China's economy, and especially to the mushrooming growth of southern China - turning ourselves, at the same time, into a predominantly services-oriented economy. It is estimated that at least three