Asia's Turning Point: An Introduction to Asia's Dynamic Economies at the Dawn of the New Century

8

Hong Kong: Ten Years with China

A Few Basics

Hong Kong is strategically located in the very center of East Asia. It is one of the most densely populated places in the world—6.9 million people in 2006 (see Figure 8.1) living on about 420 square miles.

The territory has always been looked upon as the model of freewheeling capitalism due to minimal government involvement in business activities, low taxes, free trade-oriented policies, and zero customs duties.

Figure 8.1 Population and average annual growth rate of Hong Kong, 1961–2006

Source: “2006 Population by Census—Graphic Guide,” Department of Census and Statistics, The Government of Hong Kong SAR, 2007.

Of course, the “positive noninterventionism” stance does not mean that the authorities always stay aloof. They have launched large-scale public housing programs, extended student loans, and provided export credit insurance, among other things. The government also regulates economic activities in public utilities, transport, banking, and finance. However, Hong Kong’s policy is to keep the public sector small and governmental interference minimal. In 2006, government spending equated to only 17 percent of gross domestic product (GDP), far below the 40 percent average of the Organization for Economic Co-operation and Development (OECD) countries (The Economist 2007).

As a territory, Hong Kong is not ranked in the International ...