Hong Kong Overview

Capital City:: Hong Kong

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After experiencing several difficult years, Hong Kong's economic growth has been shooting up since 2003. The GDP growth rate was 2.3% in 2002, 3.3% in 2003 and 7.5% in 2004. The IMF forecasts a 4% growth in 2005. Hong Kong is Asia's main trading hub and one of the world's most open economies, as well as Singapore. Business environment is favourable to foreign investments: simple legal framework, soft taxation and above all, almost no customs duties and no non-tariff barriers. Hong Kong is the second destination for foreign direct investments in Asia.

The agriculture sector is almost non-existent in Hong Kong which has to import 80% of its food supplying. Hong Kong does not possess any natural resources and depends on its raw materials and energy imports. The manufacturing industry contributes to 5% of the GDP and its leading sectors are textile, clothing and electrical components. Services sector, especially financial services, is the heart of the economic activity: Hong Kong is the second largest Asian money market and the world's fifth banking centre. Furthermore, the island is the second tourist destination in Asia, with 21 million visitors in 2004.

A free trade agreement entered into force on the 1st of January 2004 between Hong Kong and China, which reinforces China's influence concerning external trade. One third of China's external trade goes through Hong Kong, and re exports account for 92% of Hong Kong total exports. Its three top export partners are China, Japan and Taiwan. The country mainly imports machinery, vehicles, manufactured products and chemicals.