Hong Kong: Economic and Political Outline

Economic Overview

After the prompt and vigorous economic recovery of 2010 and sustained growth in the first quarter of 2011, the economy nearly reentered recession, Hong Kong suffering the effects of the European crisis. Due to the slowdown of the Chinese economy and the likely new recession in Europe, forecasts for 2012 are not optimistic.

The government rarely intervenes in the economic sphere, but due to political pressure, it has been asked to adopt measures protecting the poor and to fight against inflation. The latter has reached 7% in the summer of 2011, but it should decrease again in 2012, with inflation declining in China and property prices having again stabilized. A minimum wage has been introduced. The government seeks to strengthen Hong Kong's role as a global warehouse, focusing on financial services, logistics, tourism and professional services, and to develop six other sub-sectors as pillars of the economy. The cooperation agreement signed with China gives Hong Kong companies easier access to services in China. Reducing pollution is another key concern.

The economic crisis has lead to the deterioration of the labor market, particularly in the financial services. However, the unemployment rate has again decreased and remains at a historical minimum (slightly above 3%). Hong Kong must nevertheless deal with high levels of social inequality.

Main Sectors of Industry

Since the agricultural sector is almost non-existent, Hong Kong has to import 80% of its food supplies. Hong Kong does not have any natural resources and depends entirely on imports of raw materials and power. Agriculture contributes practically nothing to the economy.

The manufacturing Industry's contribution to the GDP is also very low. The country's main industrial sectors are textiles, electronic components and household appliances, computer technology and communications.

The tertiary sector, particularly financial services, is the heart of economic activity. It contributes around 90% of the GDP and employs over 85% of the active population. Hong Kong is a services center for Asian companies, especially those that trade with China. According to recent figures published by the Commercial Register, there are over 900,000 companies registered in Hong Kong. The tourism industry is booming. mainly due to an exponential increase in the number of visitors from mainland China.

Source: World Bank - Last Available Data.

Indicator of Economic Freedom

Score:

89.7/100

Position:

Free

World Rank:

1/179

Regional Rank:

1/38

Distribution of Economic freedom in the world
Source: 2011 Index of Economic freedom, Heritage Foundation

Note: The Economic freedom index measure ten components of economic freedom, grouped into four broad categories or pillars of economic freedom: Rule of Law (property rights, freedom from corruption); Limited Government (fiscal freedom, government spending); Regulatory Efficiency (business freedom, labor freedom, monetary freedom); and Open Markets (trade freedom, investment freedom, financial freedom). Each of the freedoms within these four broad categories is individually scored on a scale of 0 to 100. A country’s overall economic freedom score is a simple average of its scores on the 10 individual freedoms.

Sources of General Economic Information

Ministries

Business and Trade(information of the HK governement)
HK Trade Development Council
Commerce and Economic Development Bureau
Financial Services and the Treasury Bureau
Agriculture, Fisheries and Conservation Department
Trade and Industry Department

Statistical Office

Census and Statistics Department

Central Bank

HK Monetary Authority(HKMA)

Stock Exchange

Hong Kong Stock Exchange(SEHK)

Other Useful Resources

HK Economy

Main Online Newspapers

South China Morning Post
China Daily HK Edition e-paper
The Standard

Economic Portals

Far Eastern Economic Review

Political Outline

Type of State

Hong Kong is Special Administrative Region (SAR) of the People's Republic of China. Its status is defined by the basic law (adopted in 1990 by the National People's Assembly of China), which serves as the "constitution" of the Territory, and which confers its scope to the "one country, two systems" principle.

Executive Power

The territory is governed by a Chief Executive, elected for 5 years by a college of 800 large voters including parliamentarians, eminent personalities and representatives of the professional sectors. Mr.Donald Tsang was re-elected as Chief Executive on 25 March 2007 with 81% votes of large electors and a strong popular support (nearly 70% favorable opinions). For the first time, this election was challenged by a candidate of the democtratic camp Mr. Alan Leong, member of the Civil Party, a favorable sign of the effect of democratic debate.

The government is responsible only to the Chief Executive and is composed of 12 ministers (Secretaries) who are assisted by 17 senior functionaries who hold the title of "Permanent Secretaries". In hierarchical order, the three main government posts are the Chief Secretary- number 2 in the government, the Financial Secretary, and the Secretary for Justice. If the Chief Executive is unable to conduct his functions temporarily, they will be conducted in this order of precedence by the title holders of the main posts.

In addition, the Chief Executive is assisted by an Executive Council or Exco which includes the government ministers and 15 non-official members who are parliamentarians nominated by the Chief Executive; personalities from the business world or from civil companies. The Exco serves as the Council of Ministers by being the venue for formulation of government's policies. This council is consulted for all important political decisions. It meets once a week, under the chairmanship of the Chief Executive who should specially justify his decisions in case of disagrement with the majority of its members.

Legislative Power

The Monocameral legislative power is conferred to a legislative council of 60 members whose appointment is confirmed through a complex poll procedure which has three distinct colleges :
- 30 members are elected by univeral voting (proportional voting by geographical district);
- 30 members are elected as part of the districts called "functional", which are professional colleges (teachers, banks, real-estate sector...) of very unequal importance (from several thousands to a few tens).

The council votes for and amends laws and can also introduce any new proposal. It examines and approves the budget, taxes and public expenditure, appoints the judges for the Court of Final Appeal and the President of the High Court. It can even question the responsibility of the Chief Executive and raise questions to the government about the conduct of its policy, the absence of political responsibility of the ministers can make the legislative council limit the control exercised by this assembly on the executive power.

Their mandate is for four years. The government is directly or indirectly dependent on parliament's support, which is often given through a vote of confidence. The Chief Executive does not have the power to dissolve the Parliament. He cannot refuse to sign a bill which has been voted in by 2/3 majority in the parliament. The politicial rights of Hong Kong citizens are very limited and very elementary.

Main Political Parties

Since there is no legislation on political parties in Hong Kong, there is no legal definition of what is a political party. Most of the political parties or groups are registered either companies or as Business Corporations. Hong Kong has a multiparty system. There are several parties and one single party generally does not have any chance to win power by controlling the Legislative Council. The main political parties of the country are :
- The ADPL (Association for Democracy and People's livelihood), popular pro-democracy party
- The Citizens Party, it supports matters regarding minorities and environmental protection;
- DAB (Democratic Alliance for Betterment and Progress of Hong Kong), (in Chinese only) conservative and pro-Beijing party;
- The Democratic Party, pro-democracy and liberal party ;
- The Frontier Party, radical, pro-democracy, demands that Hong Kong should have the right to draw-up its own constitution.

Current Political Leaders

Head of State : President of China - HU Jintao (since March 2003) - Chinese Communist Party
Chief Executive : Donald TSANG (since June 2005) non-supporter

Next Election Dates

Legislative Council : in March 2017

Indicator of Freedom of the Press

World Rank:

54/179

Evolution:

20 places down compared to 2010

Source: Worldwide Press Freedom Index 2011, Reporters Without Borders

Note: The world rankings, published annually, measures the violations of press freedom worldwide. It reflects the degree of freedom enjoyed by journalists, the media and digital citizens of each country and the means used by states to respect and uphold this freedom. Finally, a note and a position is assigned to each country. To compile this index, Reporters Without Borders (RWB) prepared a questionnaire sent to partner organizations,150 RWB correspondents, journalists, researchers, jurists and activists of human rights, including the main criteria - 44 in total - to assess the situation of press freedom in a given country. It includes every kind of direct attacks against journalists and digital citizens (murders, imprisonment, assault, threats, etc.) or against the media (censorship, confiscation, searches and harassment etc.).