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Chapter 5

Commerce and Industry

Hong Kong is one of the best places to do business, a claim based on hard facts. It has been ranked the freest economy in the world for 12 years in a row; it is the world's 11th largest trading entity in terms of value of merchandise trade; it is the second largest recipient of foreign direct investment in Asia and most importantly, it continues to work hard to keep a great thing going great.

Hong Kong is a leading international trading and services hub as well as a high value-added manufacturing base. It is widely recognised as one of the freest economies in the world, and the gateway to the Mainland market.

Hong Kong's continuing economic success owes much to a simple tax structure and low tax rates, a versatile and industrious workforce, excellent infrastructure, free flow of capital and information, the rule of law, and the Government's firm commitment to free trade and free enterprise.

The Government sees its task as facilitating commerce and industry within the framework of a free market. It does not impose tariffs. Regulatory measures on international trade are kept to the minimum. Hong Kong also adopts an open and liberal investment policy and actively encourages inward investment.

The Government's industrial policy is designed to promote industrial development by creating a business-friendly environment and providing adequate support services and infrastructure. It promotes innovation and technological improvement to match Hong Kong industry's shift towards knowledge-based and high value-added activities. It aims to strengthen support for technology development and application, promote the wider use of design, develop a critical mass of fine scientists, engineers and designers, skilled technicians and venture capitalists, and encourage the development of a significant cluster of innovation and technology- based businesses.

Merchandise Trade Performance

Hong Kong's external trade grew noticeably in 2006 in line with the expansion of both the Mainland and the global economy. Total merchandise trade increased by

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