HONG KONG

Hong Kong Special Administrative Region

(SAR) of the People's Republic of China

COUNTRY OVERVIEW

LOCATION AND SIZE.

Hong Kong is located in eastern Asia. It borders the South China Sea to the south, west, and east, and shares a land border with mainland China to the north. It consists of 4 main areas: Hong Kong Island, Kowloon, the New Territories, and the Outlying Islands. Kowloon and the New Territories are on a peninsula, accounting for the bulk of Hong Kong's land. The New Territories link Hong Kong to mainland China. The Outlying Islands are made up of 234 islands in the proximity of Hong Kong, excluding Hong Kong Island where the capital city (Hong Kong) is located; the island is in the southern part of the territory. Lantau Island and Hong Kong Island are the largest islands. The entire territory, including its islands, has an area of 1,092 square kilometers (421 square miles), which makes it 6 times larger than Washington, D.C. The length of its land border and coastline are 30 kilometers (18 miles) and 733 kilometers (455 miles), respectively.

POPULATION.

Hong Kong's population was estimated to be 7,116,302 in July 2000. Its population increased from 4.4 million in 1975 to 6.7 million in 1998, indicating a growth rate of 1.8 percent. With an estimated growth rate of 0.8 percent, the population will increase to 7.7 million by 2015. In the year 2000 the estimated birth rate was 11.29 births per 1,000 people while the estimated death rate was 5.93 deaths per 1,000 people.

The majority of Hong Kong's population is of Chinese ethnicity, but non-Chinese constitute more than 8 percent of the population. Out of 595,000 foreigners residing in Hong Kong in 1999, 274,100 were from Asian countries (Philippines, Indonesia, Thailand, India, Japan, and Nepal) and the rest from Western countries (United States,

Canada, United Kingdom, and Australia). The number of expatriates grew from 320,700 in December 1993 to 485,880 in December 1998.

The population of Hong Kong is old, with 18 percent of the population age 14 or younger and 71 percent between the ages of 15 and 64. This leaves 11 percent of Hong Kong's people 65 years old and up. Given the estimated low growth rate for the 1998-2015 period, the population will be even older by 2015 when 13.7 percent of the population will be over 65 years of age.

Hong Kong is a highly urbanized society. About 95.4 percent of its population lived in urban areas in 1998, an increase of 5.7 percent since 1975. The urban population is estimated to reach 96.7 percent by 2015. The capital city of Hong Kong and the Kowloon peninsula house the majority of the population.

TAXES.

The Hong Kong government imposes tax on salaries, employment-generated incomes, pensions, property incomes, and on revenues of economic establishments. The simple tax system is characterized by low tax rates, varying between 15 and 16 percent. All individuals who receive salaries, wages, or pensions are liable for income taxes , which are not more than 15 percent of their income. As an equity measure provided by law, 61 percent of the workforce does not pay tax on salaries. All corporations or individuals involved in any type of trade, business, or profession are liable for taxes on their profits, excluding those generated from the sale of capital assets. There is a flat rate of 16 percent for the business profit tax.

The Chinese government cannot tax Hong Kong in any manner, as stipulated in the Basic Law and the Sino-British Joint Declaration. The Hong Kong government keeps all revenues, including taxes, for its own use. In February 1998, Hong Kong signed a treaty with China to eliminate double taxation of their respective businesses operating in each other's territory.

Taxes account for more than 50 percent of government revenues. The amount of direct and indirect taxes (personal and corporate) collected in the fiscal years 1998 and 1999 was US$9.7 billion and US$4.9 billion, respectively. The total amount accounted for 52.5 percent of the total government revenue of US$27.8 billion. This showed a drop in both the absolute amount of collected taxes and in the percentage of their contribution to the government revenue in 1997-98. In that fiscal year, the government collected US$11.7 billion in direct taxes and US$8.39 billion in indirect taxes. The total collected taxes contributed to 55.4 percent of the government revenue of US$36.2 billion. The financial crisis of 1997-98 caused a slowdown in the economy and lowered the amount of collected taxes in the fiscal year of 1998-99. Transportation services, including those related to seaports and airport, and capital revenues (i.e. revenues generated from investments by the Hong Kong government) are 2 other major sources of government revenues. They accounted for 44.6 percent (US$16.11 billion) and 47.5 percent (US$13.2 billion) of such revenues in the fiscal years of 1997-98 and 1998-99, respectively. In the same years, the government's share of capital revenues fell from 29.4 percent (US$10.6 billion) to 22.8 percent (US$6.3 billion), while the share of transportation services rose from 15.2 percent (US$5.3 billion) to 24.7 percent (US$6.7 billion). A growth in the use of port facilities by China-based enterprises was the main factor for the rise.

The judicial system of Hong Kong plays a major role in the economy. It is an independent body in charge of ensuring the continuation of the rule of law in all fields, including in the economy as set prior to the hand-over of Hong Kong to China and as stipulated by the Basic Law. This is essential for the free enterprise economy of Hong Kong, as it guarantees the right of its people to private property and to engage in legitimate economic activities. It also guarantees the unrestricted economic environment of Hong Kong and prevents government intervention in Hong Kong's economic affairs, which would have a negative impact on the status of the territory as a bastion of free enterprise. This status has been the major factor for the phenomenal economic growth of Hong Kong and its continued attractiveness to local and international investors. Finally, the continuation of rule of law is a guarantee against any attempt on the part of the Chinese government to intervene in the internal affairs of Hong Kong and to impose its laws and regulation on that territory.

The Hong Kong courts are in charge of upholding laws, rights, and freedoms, including respect for private property and all rights and laws necessary for the continuation of economic activities. These courts are independent and exercise jurisdiction over all cases except those falling under the jurisdiction of China's central authority, namely defense and foreign affairs.

DEPENDENCIES

Hong Kong has no territories or colonies.

BIBLIOGRAPHY

Economist Intelligence Unit. Country Finance: Hong Kong, 2001. London: Economist Intelligence Unit, January 2000.

Economist Intelligence Unit. Country Profile: Hong Kong. London: The Economist Intelligence Unit, 2001.

International Labor Office. Yearbook of Labor Statistics 1999. Geneva, Switzerland: International Labor Organization, 1999.

International Monetary Fund. International Financial Statistics Yearbook. Washington, D.C.: International Monetary Fund, 1999.

Lonely Planet. Hong Kong. <http://www.lonelyplanet.com/destinations/north_east_asia/hong_kong/index.htm> . Accessed February 2001.

United Nations Development Project. Human Development Report 2000. New York: Oxford University Press, 2000.

U.S. Central Intelligence Agency. World Factbook 2000: Hong Kong (Special Administrative Region of China). <http://www.odci.gov/cia/publications/factbook/geos/er.html> . Accessed January 2001.

U.S. Department of State. 1999 Country Reports on Human Rights Practices: Hong Kong. <http://www.state.gov/www/global/human_rights/1999/eritrea.htm> . Accessed January 2001.

U.S. Department of State. FY 2000 Country Commercial Guide: Hong Kong. <http://www.state.gov/www/about_state/business/com_guides/index.html> . Accessed January 2001.

Welsh, Frank: A History of Hong Kong. London: Harper Collins, 1993.

The World Bank. The Emerging Asian Bond Market (Background Paper), Hong Kong. The World Bank East Asia & Pacific Region. Washington, D.C.: World Bank, June 1995.

Yan-Ki Ho, Richard, Robert Haney Scott, and Kie Ann Wong, editors. The Hong Kong Financial System. Hong Kong: Oxford University Press, 1991.

—Dr.Hooman Peimani

CAPITAL:

Hong Kong.

MONETARY UNIT:

Hong Kong dollar (HK$). One Hong Kong dollar is equal to 100 cents. There are coins of 10, 20, and 50 cents, and HK$1, 2, 5, and 10. Paper currency comes in denominations of HK$20, 50, 100, 500, and 1,000.

CHIEF EXPORTS:

Clothing, textiles, footwear, electrical appliances, watches and clocks, toys.

CHIEF IMPORTS:

Foodstuffs, transport equipment, raw materials, semi-manufactures, petroleum.

GROSS DOMESTIC PRODUCT:

US$158.2 billion (1999 est.).

BALANCE OF TRADE:

Exports: US$169.98 billion (including re-exports, 1999 est.). Imports: US$174.4 billion (1999 est.).

User Contributions:

Report this comment as inappropriate
Dec 5, 2010 @ 7:19 pm
Wow! These information filled up my whole research page! THX!
Mineo Hoshi
Report this comment as inappropriate
Feb 19, 2011 @ 9:09 am
Please make a what kind of large industry there for doing business. Such as for instance, any large corporation such as IBM,etc Ranking to contribution to their economy,etc.

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