1 Introduction

 A small territory though it is, Hong Kong experienced rapid development evolving from a small
fishing village to a metropolitan city.
 It has sustained through several rounds of economic transformation and developed into one of
the most vibrant and dynamic cities in the world.

 It occupies a strategic location at the heart of East/Southeast Asia, assuming the role as a
regional transportation hub and the southern
gateway to china.

 Most parts of East Asia can be reached within five

hours of flight time from Hong Kong and about
40 Mainland cities are linked to Hong Kong by
air services.

 It has the most open economy, a stable monetary

system, a low and simple tax regime, advance
legal and accounting systems and an efficient
public service.

 All these have contributed to the success of Hong

Kong as an international business and financial center, a major trade hub as well as an
important transportation node in Asia.

1.1 Geography and Population

 The current population of the Hong Kong Special Administrative Region of the People's
Republic of China is 7,476,486 as of Saturday, February 29, 2020, based on World meter
elaboration of the latest United Nations data.
 China, Hong Kong SAR 2020 population is estimated at 7,496,981 people at mid-year according
to UN data.

 China, Hong Kong SAR population is equivalent to 0.1% of the total world population

 Hong Kong ranks number 104 in the list of countries (and dependencies) by population.

 The population density in China, Hong
Kong SAR is 7140 per Km2 (18,492
people per mi2).

 The total land area is 1,050 Km2 (405

sq. miles)

 100% of the population

is urban (7,496,981 people in 2020)

 The median age in China, Hong Kong

SAR is 44.8 years.

 Demographics
 LIFE EXPECTANCY
85.29 years
(life expectancy at birth, both sexes)

 INFANT MORTALITY
1.2
(infant deaths per 1,000 live births)

 DEATHS UNDER AGE 5

1.9
(per 1,000 live births)
  Geography
 Hong Kong, a Special Administrative Region of the People's Republic of China, can be
geographically divided into three territories: 
 Kowloon, 
 Hong Kong Island, and
 The New Territories.
 Hong Kong is a coastal city and major port
in Southern China, bordering Guangdong
province through city of Shenzhen to the north and
the South China Sea to the West, East and South.
 Hong Kong and its 260 territorial islands and
peninsulas are located at the mouth of the Pearl River
Delta. The area of Hong Kong is distinct
from Mainland China, but is considered part of "Greater China".
 Hong Kong has a total area of 1,108 km2 (428 sq mi), of which 3.16% is water.
 Sq. km

2013 2017 2018

Hong Kong Island 80.7 80.7 80.7

Kowloon 46.9 46.9 46.9

New Territories and Islands 976.9 978.8 979.0

Total 1 104.5 1 106.4 1 106.7

1.2 Historical past, current political system

Historical Timeline
 Political Issues

Year Event

2001 The Grand Bauhinia Medal being bestowed on Yeung Kwong, a leader of the Hong Kong 1967 Leftist Riots.

Central and Wan Chai Reclamation controversy

2003
HarbouFest controversy

The Link REIT IPO controversy

2005 Arrest of journalist Ching Cheong by the People's Republic of China on spying charges
Ma Ying-jeou denied visa to enter Hong Kong

Aborted proposal to grant development rights for the West Kowloon Cultural District to a single developer.
2006 Aborted proposal to introduce a Goods and Services Tax
Battle for conservation of Star Ferry Pier

Battle for conservation of Queen's Pier.

2007
Hong Kong Institute of Education academic freedom controversy

Johannes Chan Macau ban

2009 Consultation Document on the Methods for Selecting the Chief Executive and for Forming the LegCo in
2012 launched

2010 Hong Kong by-election

2010
Goddess of Democracy controversies

2014 Occupy movement expanded to Hong Kong

2017 2017 imprisonment of Hong Kong democracy activists

2019 2019 Hong Kong anti-extradition bill protests

1.3 HDI

 Between 1990 and 2018, Hong Kong, China (SAR)’s HDI value increased from 0.781 to 0.939,
an increase of 20.3 percent. Table A reviews Hong Kong, China (SAR)’s progress in each of the
HDI indicators.
 Between 1990 and 2018, Hong Kong, China (SAR)’s life expectancy at birth increased by 7.2
years, mean years of schooling increased by 3.5 years and expected years of schooling increased
by 3.7 years.
 Hong Kong, China (SAR)’s GNI per capita increased by about 130.1 percent between 1990 and
2018.

2 Sectorial Distributions

 The Government has been actively pursuing economic development in order to keep up the
competitive advantage of Hong Kong
 The traditional Four Key Industries in Hong Kong,
namely
 financial services,
 tourism
 trading and logistics
 professional and producer services
have been the driving force of Hong Kong's economic
growth, providing impetus to growth of other sectors
and creating employment.
 Taken together, the share of the total value added of
the Four Key Industries in Gross Domestic Product (GDP) was 57.3%, while the percentage
 share of total employment was 46.3%. Compared with 2017
 The value added of financial services industry recorded the highest growth rate (+10.9%),
or 19.7% of GDP.
 The industry also employed 263 000 persons in 2018, or 6.8% of total employment.

Employment distribution by industry section

           
Percentages
Industry section
2014 2018 2019@
Manufacturing 2.8 2.3 2.3
Electricity and gas supply 0.2 0.2 0.2
Water supply; sewerage, waste
0.2 0.2 0.2
management and remediation services
Construction 8.3 8.9 8.6
Import and export trade 13.8 12.5 11.6
Wholesale 1.6 1.5 1.5
Retail 8.8 8.5 8.2
Transportation, storage, postal and
8.5 7.9 8.0
courier services
Accommodation(1) and food services 7.4 7.2 7.2
Information and communications 2.9 2.9 3.0
Financing and insurance 6.3 6.8 7.1
Real estate 3.5 3.6 3.7
Professional, scientific and technical
4.9 5.1 5.3
services
Administrative and support services 5.1 5.3 5.2
Public administration 2.9 3.0 3.0
Education 5.4 5.6 5.8
Human health and social work services 4.9 5.2 5.4
Arts, entertainment and recreation 1.4 1.5 1.5
Other social and personal services 11.1 11.8 12.1
Others 0.1 0.1 0.1
All industry sections 100.0 100.0 100.0
3
Total employment ('000) 3 744.2 867.6 3 862.8
(+0.5) (+1.1) (-§)
Notes : Figures refer to the Composite Employment
Estimates. Figures for 2019 are averages of
the first 3 quarters of the year.
  (1) Accommodation services cover
hotels, guesthouses, boarding houses
and other establishments providing
short term accommodation.
           
Last revision date : 19
         
December 2019

3 Economic Status
 Hong Kong’s economy contracted by 2.9% quarter-on-quarter in real terms in the fourth
quarter of 2019, after a fall of 2.8% in the preceding quarter. Considering the slowdown in global
economic growth and the threat of novel coronavirus infection, the Government forecasts Hong
Kong’s economy to grow by -1.5% to 0.5% in 2020.
 Overall consumer prices rose by 1.4% in January 2020 over the same month a year
earlier, lower than the corresponding increase of 2.9% in December 2019. Considering inflation
rates in Hong Kong’s major import sources are likely to remain contained the Government
forecasts Hong Kong’s underlying consumer price inflation at 2.5% in 2020.
 The value of retail sales, in nominal terms, decreased by 19.4% year-on-year in
December 2019 over the same month a year earlier, compared with a year-on-year decrease of
23.7% in November 2019.
 The labor market conditions showed signs of easing. The seasonally adjusted
unemployment rate increased from 3.3% in October – December 2019 to 3.4% in the three
months ending January 2020.
 Merchandise exports fell by 22.7% in January 2020 over the same month a year earlier,
after a year-on-year increase of 3.3% in December 2019.

Inflation
 Consumer price inflation went up in 2019, primarily due to a sharp increase in pork
prices amid reduced supply of fresh pork since May. .
 External price pressures receded through 2019, thanks to the moderation in inflation rates
in many of our major import sources and generally soft international commodity and
energy prices amid the global economic slowdown.
 The strengthening of the Hong Kong dollar along with the US dollar against other major
currencies during the year also contributed to the lower imported inflation.
  As a broad measure of the overall change in prices in the economy, the increase in GDP
deflator moderated from 3.6% in 2018 to 2.4% in 2019.
 The terms of trade deteriorated slightly in 2019, as the rise in export prices was somewhat
slower than that in import prices. Taking out the external trade components, the domestic
demand deflator rose by 2.7% in 2019, 0.7 percentage points lower than the
corresponding increase in 2018.

4 International Trade and Investments

 Total exports of goods compiled under the GDP accounting framework fell by 4.7% in real terms
in 2019, in contrast to the 3.5% growth in 2018, as the global economic slowdown and US-
Mainland trade tensions dampened global trading and investment activities.
 Exports of services deteriorated sharply and fell by 10.4% in real terms in 2019 after the solid
expansion of 4.6% in 2018. This represented the largest annual decline on record.
 Exports of travel services plunged by 21.0% for the year as a whole, the largest annual decline
on record.
 Specifically, exports of transport services turned to a visible fall, reflecting subdued cargo and
passenger flows.
 Exports of financial as well as business and other services also declined, as cross-border
financial and commercial activities weakened amid softening global economic growth.
 Imports of goods fell markedly by 7.6% in real terms in 2019, having grown by 5.9% in 2018.
 Retained imports, which refer to the imports for domestic use and accounted for around one-
quarter of total imports, plummeted by 14.7%, reflecting the significant fall-offs of domestic
demand.
 Imports of services switched to a decline of 2.3% in real terms in 2019, after recording a 2.7%
growth in 2018.
 Investment Flows (FDI)

 According to the UNCTAD World Investment Report 2019, global FDI inflows to Hong
Kong amounted to US$115.7 billion in 2018, ranked 3rd globally, behind only Mainland China
(US$139 billion) in Asia.
 In terms of FDI outflows, Hong Kong ranked 3rd in Asia with US$85.2 billion, after
Japan (US$143.2 billion) and Mainland China (US$129.8 billion).
 In terms of FDI stock, Hong Kong was the world’s 2nd largest host with US$1,997.2
billion, after the United States, and the world’s 4th largest investor with US$1,870.1 billion in
2018.
 The most important source for Hong Kong’s inward Direct Investment is the British
Virgin Islands (BVI), accounting for 32.8% of the total position of Hong Kong’s Inward Direct
Investment at the end of 2017.
 The second largest source of investment is from the Mainland China, accounting for
25.5% of the total position of Hong Kong’s Inward Direct Investment at the end of 2017.
 The Cayman Islands, the Netherlands and Bermuda took up another 7.9%, 5.8% and 4.3%
respectively.
 One distinct feature of such direct investment was the indirect channeling of capitals
from non-operating companies in tax haven economies.
 Balance of Payments

Hong Kong recorded a BoP deficit of $59.8 billion (as a ratio of 8.3% to GDP) in the third
quarter of 2019, as against a surplus of $28.3 billion (as a ratio of 4.1% to GDP) in the second
quarter of 2019. Reserve assets correspondingly decreased by the same amount ($59.8 billion) in
the third quarter of 2019.

Trade Policies, Trade Relations

 Trade Relations
  Founding member of the World Trade Organization (WTO)
 Member of the Asia-Pacific Economic Cooperation (APEC)
 Member of the Pacific Economic Cooperation Council (PECC)
 Member of the Asian Development Bank (ADB)
 Member of the Asian Infrastructure Investment Bank (AIIB)
 Associate member of the United Nations Economic and Social Commission for Asia and
the Pacific (ESCAP)
 Observer of the Trade Committee of the Organization for Economic Cooperation and
Development (OECD)
 Trade Policies
 Hong Kong is a free port and does not levy any Customs tariff on imports or exports,
except there are four types of dutiable commodities which are liquors, tobacco,
hydrocarbon oil and methyl alcohol.
 The certification system in Hong Kong is to facilitate local products to be exported
outside Hong Kong by certifying their origins.  Imports do not require origin
certification.
 Any persons who import or export any goods (other than exempted articles) are required
to lodge accurate and complete import/export declarations to Hong Kong Customs within
14 days after the import/export of goods.
 Subject to certain conditions, shipping companies, airlines and freight companies which
have registered with the Trade and Industry Department are exempted from the
import/export licensing requirements for their transshipment cargoes.

5 Global Integrations

 Hong Kong is the world’s freest economy. It is the world's most services-oriented economy, with
services sectors accounting for more than 90% of GDP.
 According to World Trade Organization (WTO), Hong Kong is the world's 8th largest exporter
of merchandise trade and the world's 15th largest exporter of commercial services in 2018.
 Hong Kong is an important banking and financial center in the Asia Pacific. Hong Kong
is the 3rd leading global financial center, only after New York and London, according to
the Global Financial Centre Index.

 According to a triennial survey conducted by the Bank for International Settlements,

Hong Kong is the 2nd largest foreign exchange market in Asia and the
4th largest in the world in 2019, with the average
daily turnover of forex transactions increasing by
44.8% from US$436.6 billion in April 2016 to
US$632.1 billion in April 2019.
 As at the end of December 2019, Hong
Kong's stock market ranked the 3rd largest in Asia
and the 5th largest in the world in terms of market
capitalization. There were 2,449 companies listed on HKEx and the total
market capitalization of Hong Kong's stock market reached US$4.9 trillion.
 The Hong Kong International Airport is the world's busiest airport for international air
cargo since 2010. Hong Kong is also one of the world's busiest container ports. In 2018, Hong
Kong ranked 7th in the world in terms of container throughput.
 Within the Greater Pearl River Delta (PRD) Region, a three-hour living circle and a one-
hour
Intercity traffic circle has already emerged with major new infrastructure. These include the
Guangzhou-Shenzhen-Hong
Kong Express Rail Link
(Hong Kong Section), Hong
Kong-Zhuhai-Macao Bridge
(HZMB) and
Liantang/Heung Yuen Wai
Boundary Control Point and
Link Road under
construction. They will
foster greater social and
economic interactions and
economies of scale of the
Greater PRD city region.

 The Belt and Road

Initiative (BRI) proposes
developing the Silk Road
Economic Belt and 21st
Century Maritime Silk Road
with the intention of
promoting economic
cooperation among countries along the proposed routes. The Initiative has been designed to
enhance the orderly free-flow of economic factors and the efficient allocation of resources.
 

 Recent Government Initiatives

2019 Policy Address
. Below are some relevant highlights:
 Organize delegations and invite Mainland and Hong Kong enterprises to conduct joint
promotional activities in the B&R economies.
  Seek the policy support of the relevant Central authorities to extend the incentives and
facilitations currently enjoyed by Mainland enterprises to Hong Kong enterprises
intending to set up businesses in the Mainland’s overseas Economic and Trade Co-
operation Zones.
 Seek the policy support of the relevant Central authorities for tax concessions for Hong
Kong enterprises wishing to shift from exports to domestic sales and streamlining of the
approval process, with a view to enhancing their competitiveness in the Mainland
domestic market.
 Extend the coverage of the Technology Talent Admission Scheme to companies outside
the Hong Kong Science and Technology Parks Corporation and Cyber port and to cover
new technology areas.
 Extend the coverage of the Researcher Programme, Postdoctoral Hub and Public Sector
Trial Scheme to all technology companies conducting research and development
activities.
 Inject $500 million into the Social Innovation and Entrepreneurship Development Fund
to further promote social innovation.
 To implement the Railway Development Strategy 2014, commence detailed planning and
design for the Tung Chung Line Extension, Tuen Mun South Extension and Northern
Link.

 2020-21 Budget
The Financial Secretary, Mr Paul Chan, unveiled his 2020-21 Budgets on 26 February 2020.
Below are some highlights:
 Provide a counter-cyclical measures of a massive scale involving above HK$120 billion,
including the HK$30 billion Anti-epidemic Fund already established and HK$18.3 billion
relief measures for enterprises
 Waive the stamp duty on stock transfers paid by ETF market makers in the course of
creating and redeeming ETF units listed in Hong Kong
 Provide tax concessions for the ship leasing business, including a profits tax exemption to
qualifying ship lessors and a half-rate profits tax concession to qualifying ship leasing
managers
 Implement the two-way wealth management connect scheme in Guangdong-Hong Kong-
Macao Greater Bay Area as early as possible

6 Recommendations
  Hong Kong has been positioning itself as Asia’s World City.
 According to an array of international surveys and global benchmarking indexes, Hong
Kong stands out as a highly competitive global city, a leading financial center and
business hub, an attractive tourist destination, a city with a reputable brand, and a city
with world-class infrastructure.
 Some of the comparative advantages are good international and regional connectivity,
compact city form, high urban mobility, a vast expanse of green spaces and large areas
of nature and cultural heritage conservation importance.
 It has the most open economy, a stable monetary system, a low and simple tax
regime, advance legal and accounting systems and an efficient public service.
 Nevertheless, Hong Kong only has a moderate performance for liveability and
innovation, which must be enhanced.
 The development of Belt and Road Initiative & Greater Pearl River Delta (PRD) would
give Hong Kong as much more opportunities in the coming future.
 In areas where Hong Kong does well, they should be reinforced in future planning to
maintain leading position and they are taking efforts through the Planning & Vision
Strategy 2030.
 They have an entire different council to promote, assist and develop Hong Kong's
trade, they organizes international exhibitions, conferences and business missions to
create business opportunities for companies, particularly small and medium-sized
enterprises (SMEs), in the mainland and international markets. They also provide up-to-
date market insights and product information via trade publications, research reports and
digital news channels.
 No Doubt there is some political instability & economic slowdown due to protest and
coronavirus and currently it had impacted the growth of the country.
 But looking the above facts and figures we can say that it would be the world’s leading
business hub.
 And we could recommend setting up the company/ business in the country.

7 Sources & References

 The Planning Department & Development Bureau of government of Hong Kong:
https://www.hk2030plus.hk/index.htm
 The Website of Government of Hong Kong: https://www.gov.hk/
 Hong Kong 2030+ Public Engagement Booklet
 Census & Statistics Department, HKSAR
 Some from Google Search results
 Website of The Hong Kong Trade Development Council (HKTDC) :
https://aboutus.hktdc.com/en/#home