Hong Kong Special Administrative Region (SAR)

Economic and political outline

Economic indicators | Foreign Trade in figures | Political outline

Economic indicators

Hong Kong's economy is considered a model of capitalism for its devotion to free trade, low taxes, zero custom duties and above all no governmental interference. Hong Kong is the world's 11th largest trading hub and 13th largest banking centre. Hong Kong is the 2nd most attractive destination for foreign direct investments in Asia. However, after experiencing several difficult years (starting from Asian financial crises in 1998 to bird flue in 2003), Hong Kong's economic growth was shooting up again since 2003, recording high GDP growth rates (8.6% in 2004 and 7.5% in 2005). However, according to IMF and due to slow down in global trade, the economic growth rate is also slowing down to 5.7% in 2007 and 4.7% forcasted for 2008. The current-account surplus will remain substantial, while inflation will continue to edge up (it went up from 0.9% in 2005 to 2.0% in 2007).

GDP Indicators	2004	2005	2006	2007	2008
GDP (billions USD)	165.82	177.78	189.80	202.96e	216.27e
GDP (constant prices, annual % change)	8.6	7.5	6.9	5.7e	4.7e
GDP per capita (USD)	24,393.92	26,000.11	27,504.26	29,149.10e	30,783.29e
General government balance (in % of GDP)	1.7	1.0	4.0e	1.7e	3.0e
Inflation rate (%)	-0.4	0.9	2.0	2.0e	3.2e
Unemployment rate (% of the labor force)	6.9	5.7	4.8	4.2	4.0
Current Account (billions USD)	15.73	20.23	20.59e	22.80e	20.46e
Current Account (in % of GDP)	9.5	11.4	10.8e	11.2e	9.5e

Source: IMF - World Economic Outlook Database

Note: (e) Estimated data

Socio-demographic indicators	2006	2007	2008
Unemployment rate (%)	4.8	4.2	4.0

Source:

Main sectors of industry

The agriculture sector is almost non-existent in Hong Kong which has to import 80% of its food supplies. Hong Kong does not possess any natural resources and is entirely dependent on imports for raw materials and energy. In fact, imports and exports (including re-exports) exceed the country’s GDP. The manufacturing industry contributes around 9% to the GDP; the main industrial sectors being textile, clothing and electrical components. Services sector, especially financial services, is the heart of the economic activity and contributes nearly 90% to the GDP. The tourism industry is booming mainly due to exponential increase in the number of visitors from mainland China. The upsurge has also been boosted by the recent opening of Hong Kong Disneyland Resort.

Breakdown of economic activity by sector	Agriculture	Industry	Services
Value added (annual % change)	-3.3	-1.6	7.7
Value added (in % of GDP)	0.1	9.2	90.7
Employment by sector (in % of total employment)	0.3	15.2	84.6

Source: World Bank - World Development Indicators - last available data.

Monetary indicators	2002	2003	2004	2005	2006
Average annual exchange rate for 1 USD	7.80	7.79	7.79	7.78	7.77

Source: World Bank - World Development Indicators

Foreign trade in figures

Hong Kong has extensive trade and investment ties with the People's Republic of China which existed even before the handover of July 1997. One third of China's external trade goes through Hong Kong, and re-exports account for more than 90% of Hong Kong total exports. Its top three export partners are: China, the U.S.A. and Japan; while as the top three import partners are: China, Japan and Singapore. The country mainly imports machinery, vehicles, oil & gas, food products, and ores & metals; while as the goods mainly exported are manufactured products and ores & metals.

Foreign trade indicators	2002	2003	2004	2005	2006
Imports of goods (millions USD)	205,353	230,435	269,575	297,206	331,634
Exports of goods (millions USD)	200,300	224,656	260,263	289,579	317,600
Imports of services (millions USD)	25,964	26,126	31,138	33,979	36,560
Exports of services (millions USD)	44,600	46,555	55,157	63,761	72,734
Imports of goods and services (annual % change)	7.5	11.5	14.2	8.5	9.7
Exports of goods and services (annual % change)	9.1	13.1	15.8	11.2	10.0
Imports of goods and services (in % of GDP)	141.3	161.9	181.4	186.3	194.0
Exports of goods and services (in % of GDP)	149.6	171.1	190.2	198.7	205.7
Trade Balance (millions USD)	-5,053	-5,779	-9,312	-7,627	-14,033
Trade Balance (including service) (millions USD)	13,583	14,651	14,708	22,156	22,140
Current Account (millions USD)	12,412	16,470	15,728	20,233	20,575
Current Account (in % of GDP)	7.6	10.4	9.5	11.4	10.8
Foreign trade (in % of GDP)	290.9	333.0	371.6	385.0	399.7

Source: World Bank - World Development Indicators

Main partner countries

Main customers (% of exports)	2006
China	46.3%
United States	14.8%
Japan	4.8%
United Kingdom	3.7%
Germany	3.0%

Main suppliers (% of imports)	2006
China	45.8%
Japan	10.3%
Singapore	6.3%
United States	4.8%

Source: 2006

Main products

Main exports (% of exports)	2006
Electrical machinery and equipment	37.7%
Machinery and mechanical appliances	15.5%
Natural or cultured pearls, precious or semi-precious stones	5.7%
Articles of apparel and clothing accessories, knitted	4.3%
Plastics	4.1%

Main imports (% of imports)	2006
Electrical machinery and equipment	37.9%
Machinery and mechanical appliances	14.6%
Natural or cultured pearls, precious or semi-precious stones	4.9%
Plastics	4.3%
Photographic, cinematographic, measuring and medical instruments	3.3%

Source: 2006

To see more products: More imports (Intracen Data)
More exports (Intracen Data)

Political outline

Main political parties: Hong Kong has no legislation for political parties, and thus has no legal definition for what a political party is. Most political parties and political groups registered either as limited companies or societies. Hong Kong has a multi-party system, with numerous parties in which no one party often has a chance of gaining power by controlling the Legislative Council.The main political parties in the country are:
- ADPL (Association for Democracy and People's Livelihood) – a pro-democracy grassroot level party,
- Citizens Party – advocates minority issues and favors environmental protection,
- DAB (Democratic Alliance for the Betterment and Progress of Hong Kong) - conservative and pro-Beijing party,
- Democratic Party - a pro-democracy and liberal political party,
- Frontier Party – radical, pro-democracy, demands the right to draft Hong Kong's own constitution.
Current political leaders: Chief of state: President of China - HU Jintao (since March 2003) - Chinese Communist Party
Chief Executive: Donald TSANG (since June 2005) – non-partisan
Next election dates: Chief Executive: 2012
Legislative Council: 2012