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- GDP (PPP):
- $414.6 billion
- 2.4% growth
- 2.9% 5-year compound annual growth
- $56,701 per capita
- Inflation (CPI):
- FDI Inflow:
Hong Kong has demonstrated a high degree of economic resilience and remains one of the world’s most competitive financial and business hubs. The high-quality legal framework, which provides effective protection of property rights and strong support for the rule of law, continues to be a cornerstone of strength for this dynamic city. There is little tolerance for corruption, and government integrity is buttressed by a high degree of transparency.
Regulatory efficiency and openness to global commerce strongly support entrepreneurial activity. Interaction with China has become more intense through strengthened financial and other noneconomic linkages, and Hong Kong is by far the most significant transit point for exports and imports to and from China.
Hong Kong became part of the People’s Republic of China (PRC) in 1997. Under the “one country, two systems” agreement, China promised not to impose its socialist policies on Hong Kong and to allow Hong Kong a high degree of autonomy in all matters except foreign and defense policy for 50 years. This autonomy policy has been stressed by political interference from the PRC in recent years. Major industries include financial services and shipping; manufacturing has largely migrated to Mainland China and other Southeast Asian economies.
Private ownership of property is enshrined in the Basic Law, which is Hong Kong’s constitution. Commercial and company laws provide for effective enforcement of contracts and protection of corporate rights. The judiciary is independent, but Beijing reserves the right to make final interpretations of the Basic Law, effectively limiting the power of Hong Kong’s Court of Final Appeal. Hong Kong has an excellent track record in combating corruption.
The standard individual income tax rate is 15 percent, and the top corporate tax rate is 16.5 percent. The tax system is simple and efficient. The overall tax burden equals 14.4 percent of total domestic income. Government spending has amounted to 18.3 percent of total output (GDP) over the past three years, and budget surpluses have averaged 2.0 percent of GDP. Public debt is equivalent to 0.1 percent of GDP.
Business freedom is well protected within an efficient regulatory framework. Transparency encourages entrepreneurship, and the overall environment is conducive to the formation and operation of start-up businesses. The labor code is strictly enforced but not burdensome. Hong Kong has very few price controls, but it does fund some subsidies and regulates residential rents and prices for telecommunications, public transport, and electricity.
Trade is extremely important to Hong Kong’s economy; the value of exports and imports taken together equals 400 percent of GDP. The average applied tariff rate is zero percent. Hong Kong is very open to global trade and investment. The financial regulatory and legal environment focuses on ensuring transparency and enforcing prudent minimum standards. There are no restrictions on foreign banks, which are treated the same as domestic institutions.