Hong Kong

Occupied by the UK in 1841, Hong Kong was formally ceded by China the following year; various adjacent lands were added later in the 19th century. Pursuant to an agreement signed by China and the UK on 19 December 1984, Hong Kong became the Hong Kong Special Administrative Region (SAR) of China on 1 July 1997. In this agreement, China has promised that, under its "one country, two systems" formula, China's socialist economic system will not be imposed on Hong Kong and that Hong Kong will enjoy a high degree of autonomy in all matters except foreign and defense affairs for the next 50 years.

Main Airports

U.S. Embassy

The U.S. Consulate General can be found at 26 Garden Road, Hong Kong
Tel: (852) 2523-9011

Statistics

GDP: purchasing power parity:

$227.3 billion (2005 est.)

GDP - real growth rate:

7.3% (2005 est.)

GDP - per capita: purchasing power parity:

32,900 (2005 est.)

Inflation rate (consumer prices):

0.9% (2005 est.)

Labor force:

3.61 million (October 2005)

Exports:

$286.3 billion f.o.b., including reexports (2005 est.)

Exports - partners:

China 45%, US 16.1%, Japan 5.3% (2005)

Imports:

$291.6 billion (2005 est.)

Imports - partners:

China 45%, Japan 11%, Taiwan 7.2%, Singapore 5.8%, US 5.1%, South Korea 4.4% (2005)

Population:

6,940,432 (July 2006 est.)

Population growth rate:

0.59% (2006 est.)

Population Below Poverty Line:

NA%

Major Industries:

textiles, clothing, tourism, banking, shipping, electronics, plastics, toys, watches, clocks

Employing Workers: 16*

Registering Property: 60*

Enforcing Contracts: 10*

Closing a Business: 14*

*2006 World Bank rank out of 175 countries

Starting a Business

The table below shows the number of steps and the amount of time needed to start a business, on average

Indicator	Hong Kong	Region
Procedures (number)	5	8.2
Time (days)	11	46.3

Hong Kong Risk Assessment

Country Rating

Rating: A1

The political and economic situation is very good. A quality business environment has a positive influence on corporate payment behaviour. Corporate default probability is very low on average.

Risk Assessment

Economic growth has been slowing due to less dynamic foreign demand, particularly from the United States. Foreign trade should thus contribute only 0.2 points of growth in 2008 against 5.7 points in 2006. Several factors could, however, mitigate the impact of the American slowdown, including a household consumption recovery buoyed by the decline of interest rates, low unemployment, and a wealth effect associated with rising stock market and property prices. In this context, the payment experience registered by Coface has been satisfactory. Only very sparse information may be available, however, on the accounts of unlisted companies, which have no obligation to publish financial statements. But the debt collection possibilities available through an effective legal system compensate for that shortcoming.

The trade deficit grew wider in 2007 under the combined effect of strong domestic demand and a goods export slowdown. And the deterioration should intensify in 2008. The current account surplus should thus also shrink in 2008. But it will remain at a good level thanks to the growth of services exports. The Hong Kong dollar should remain pegged to the US dollar in 2008.

The public sector balance should remain in surplus in 2008 thanks the dynamism of domestic demand. Bolstered by those surpluses, the government should go forward with their infrastructure enhancement programme intended to allow Hong Kong to retain a dominant trade-transit position in Asia.

In the political arena, Donald Tsang has just won re-election to a third five-year term as chief executive. He will have to contend with various demonstrations by democrats seeking to institute direct universal suffrage. Any voting system reform would, however, necessitate assent from Beijing.

STRENGTHS

• Hong Kong has benefited from China's growth via an influx of tourists and strong demand for services that represent 92 per cent of the territory's GDP
• The banking system is solid and very transparent.
• Good governance and an efficient prudential regulatory system inherited from anglo-saxon law constitute major competitive advantages in Asia.
• Hong Kong boasts quality infrastructure including the world's second largest container port, a key aviation hub for Asia, and the world's second largest cargo airport.
• The "one country, two systems" principle should endure considering the complementarity of the Chinese and Hong Kong economies.

• Increasingly integrated with Continental China, the economy is becoming vulnerable to economic reversals and Chinese policy changes.
• Industry has completely been relocated to Continental China.
• Mainland China has begun to compete with Hong Kong in services.
• Almost half of fiscal revenues are linked to the property sector, which constitutes a source of vulnerability.
• Despite growing inequality in the territory, introduction of a minimum wage or a redistribution system is unlikely.
• Pressure exerted by segments of the population for democratisation of the territory has affected relations with Beijing.

• Agriculture
• Apparel
• Arts & Crafts
• Automobile
• Bags, Cases & Boxes
• Chemicals
• Computer Hardware & Software
• Construction & Real Estate
• Consumer Electronics
• Electrical & Electronics
• Energy & Environment
• Food & Beverage
• Furniture & Furnishing
• Health & Medicine
• Home Supplies
• Industrial Supplies
• Lights & Lighting
• Machinery
• Mineral & Materials
• Office Supplies
• Security & Protection
• Service
• Sports & Entertainment
• Telecommunications
• Textile
• Toys
• Transportation