Detailed Review of Hong Kong’s Economy
Hong Kong experienced difficulties during the 2008 financial crisis and entered a recession. However, the economy has recovered very well and since 2010 the region has grown to rival that of European countries with 2.2% growth estimated for 2014. Hong Kong derives its wealth from its diverse business types including: textiles, home appliances, electronics, IT, telecommunications and financial services. The financial services sector is most crucial since 90% of the country’s GDP comes from the tertiary sector, which employs 85% of Hong Kong’s workers. Tourism is also a growing industry which is becoming increasingly important to the economy.
Hong Kong is very dependent on its neighbours because the region has no natural resources and has a minimal agricultural sector, forcing it to rely almost entirely on importation. At present, there are 900 000 companies registered in Hong Kong, which is a favoured location for trade with China and Asia in general.
Hong Kong has a capitalist economic model which is especially committed to free trade since international trade is vital for its growth. The region is one of the top 15 global exporters and its main trading partners are China, Japan and South East Asia. In recent years, Hong Kong’s imports have tended to rise faster than exports, threatening the balance of trade in the region.
Hong Kong’s Economic Strengths
- Hong Kong offers a route to trade with China, the leading global producer.
- Hong Kong has a highly qualified and professional corporate services infrastructure.
- Hong Kong’s economy is strong and resilient.
- The banking system is stable and efficient.
- Hong Kong makes establishment for foreign company simple and has a high degree of information transparency.
- The country has a high level of political transparency and a stable system of government providing various tax benefits.
- Hong Kong has a qualified and affordable workforce.
Hong Kong’s Economic Weaknesses
- Doubts persist about the future management of Hong Kong if the country becomes more fully integrated with China.
- The territory is heavily dependent upon its financial sector.