Economy of Hong Kong

Hong Kong's economy is often described as a premier global financial and logistics hub, with a low-tax and free-market structure, though assessments of its overall robustness vary among analysts.This include a sound banking system, virtually no public debt, a strong legal system, ample foreign exchange reserves with assets of US$481.6 billion represent over six times the currency in circulation or about 46 per cent of Hong Kong dollar M3 as at the end of March 2022,^[25] rigorous anti-corruption measures and close ties with mainland China.^[26] The Hong Kong Stock Exchange is a favourable destination for international firms and firms from mainland China to be listed, due to Hong Kong's highly internationalised and modernised financial industry. Additional advantages include the city's capital market in Asia, its size, regulations and available financial tools, which are comparable to London and New York City.^[27][28]

Hong Kong's gross domestic product had grown 180 times between 1961 and 1997. Also, the GDP per capita rose by 87 times within the same time frame.^[29] Its economy is slightly larger than Chile's or Romania's^[30][31][32] and its GDP per capita at purchasing power parity was the twelfth highest globally in 2023. By the latter measure, its GDP per capita was higher than those of the Netherlands, and slightly lower than Brunei. In 2009, Hong Kong's real economic growth fell by 2.8% as a result of the Great Recession.^[33]

By the late 20th century, Hong Kong was the seventh largest port in the world and second only to New York City and Rotterdam in terms of container throughput. Hong Kong is a full Member of the World Trade Organization.^[34] The Kwai Chung container complex was^[when?] the largest in Asia, while Hong Kong shipping owners were^[when?] second only to those of Greece in terms of total tonnage holdings in the world. The Hong Kong Stock Exchange is the sixth largest in the world, with a market capitalisation of about US$3.732 trillion.^[35]

Hong Kong has also had an abundant supply of labour from the regions nearby. A skilled labour force coupled with the adoption of modern British/Western business methods and technology ensured that opportunities for external trade, investment, and recruitment were maximised. Prices and wages in Hong Kong are relatively flexible, depending on the performance and stability of the economy of Hong Kong.^[36]

Hong Kong raises revenues from the sale and taxation of land and through attracting international businesses to provide capital for its public finance, due to its low tax policy. According to Hawksford, Hong Kong is considered by some sources to be among the more attractive business environments in East Asia, in terms of attracting foreign direct investment (FDI), depending on the assumptions, timeframe and metrics applied.^[37] In 2024, Hong Kong was the third largest recipient of FDI in the world.^[38]

Hong Kong ranked fourth on the Tax Justice Network's 2011 Financial Secrecy Index.^[39] The Hong Kong Government was the fourth highest ranked Asian government^[40] in the World Economic Forum's Network Readiness Index (NRI), a measure of a government's information and communication technologies in 2016, and ranked 13th globally.^[41]

Hong Kong is ranked as the 18th most innovative territory in the Global Innovation Index in 2024, and 3rd in the Global Financial Centres Index.

According to the Economic Freedom of the World 2024 report, Hong Kong emerged as the top-ranked region, excelling particularly in the domains of Freedom to Trade Internationally and Regulation.

Since the 1997 handover, Hong Kong's economic future became far more exposed to the challenges of economic globalisation and the direct competition from cities in mainland China. In particular, Shanghai claimed to have a geographical advantage. The Shanghai municipal government dreamt of turning the city into China's main economic centre by as early as 2010.^[42]

Since the 1997 handover, Hong Kong's share of China's GDP has dropped from 18.4% to 2.1% in 2021. In 2021, the Housing Price Index was double of what it was in 1997, while the Real Wage Index was almost unchanged.^[43]

Hong Kong's economic policy has often been cited by economists such as Milton Friedman and the Cato Institute as an example of laissez-faire capitalism, attributing the city's success to the government having a relatively low level of involvement in the economy. However, others have argued that the economic strategy is not at all adequately characterised by the term laissez-faire.^[44] They point out that there are still many ways in which the government is involved in the economy, some of which exceed the degree of involvement in other capitalist countries. For example, the government is involved in public works projects, healthcare, education, and social welfare spending. Further, although rates of taxation on personal and corporate income are low by international standards, unlike most other countries Hong Kong's government raises a significant portion of its revenues from land leases and land taxation. All land in Hong Kong is owned by the government and is leased to private developers and users on fixed terms, for fees which are paid to the state treasury. By restricting the sale of land leases, the Hong Kong government keeps the price of land at what some consider as artificially high prices and this allows the government to support public spending with a low tax rate on income and profit.^{[citation needed]} Moreover, as demonstrated in the regulation of finance companies in the 1970s and 1980s, the principle of positive non-interventionism in practice involved the government intervening in markets, albeit often hesitantly and belatedly, when the public interest was perceived to be threatened. The concept evolved towards a policy of "when in doubt, do nothing" during this period of financial instability.^[45]

The following table shows the main economic indicators in 1980–2021 (with IMF staff estimates in 2022–2027). Inflation below 5% is in green.^[69]

More information Year, GDP (in Bil. US$PPP) ...

Year	GDP (in Bil. US$PPP)	GDP per capita (in US$ PPP)	GDP (in Bil. US$nominal)	GDP per capita (in US$ nominal)	GDP growth (real)	Inflation rate (in Percent)	Unemployment (in Percent)	Government debt (in % of GDP)
1980	36.1	7,130.7	28.9	5,704.0	10.3%	4.4%	3.8%	n/a
1981	43.1	8,325.5	31.1	5,995.2	9.2%	9.5%	3.9%	n/a
1982	47.1	8,956.7	32.3	6,139.0	2.9%	11.0%	3.5%	n/a
1983	51.9	9,701.3	29.9	5,590.2	6.0%	9.9%	4.4%	n/a
1984	59.2	10,892.1	33.5	6,170.5	10.0%	8.5%	3.9%	n/a
1985	61.5	11,173.8	35.7	6,490.4	0.7%	3.6%	3.2%	n/a
1986	69.7	12,515.9	41.1	7,380.1	11.1%	3.6%	2.8%	n/a
1987	80.9	14,415.0	50.6	9,015.2	13.4%	5.7%	1.7%	n/a
1988	90.9	16,032.8	59.7	10,527.5	8.5%	7.8%	1.4%	n/a
1989	96.6	16,877.5	68.8	12,012.6	2.3%	10.2%	1.1%	n/a
1990	104.1	18,099.3	76.9	13,374.3	3.8%	10.3%	1.3%	n/a
1991	113.8	19,563.0	89.0	15,297.6	5.7%	11.2%	1.8%	n/a
1992	123.6	20,995.4	104.3	17,710.5	6.2%	9.6%	2.0%	n/a
1993	134.4	22,405.6	120.4	20,065.7	6.2%	8.8%	2.0%	n/a
1994	145.5	23,784.5	135.8	22,194.0	6.0%	8.8%	1.9%	n/a
1995	152.1	24,262.2	144.7	23,070.5	2.4%	9.0%	3.2%	n/a
1996	161.5	24,975.4	159.7	24,699.0	4.3%	6.3%	2.8%	n/a
1997	172.7	26,496.4	177.3	27,214.6	5.1%	5.8%	2.2%	n/a
1998	164.3	24,962.9	168.9	25,649.1	-5.9%	2.8%	4.7%	n/a
1999	170.8	25,737.3	165.7	24,969.0	2.5%	-4.0%	6.3%	n/a
2000	188.1	28,025.5	171.6	25,574.5	7.7%	-3.7%	4.9%	n/a
2001	193.4	28,737.1	169.4	25,166.9	0.6%	-1.6%	5.1%	n/a
2002	199.7	29,688.3	166.3	24,731.1	1.7%	-3.0%	7.3%	n/a
2003	209.8	31,022.4	161.4	23,856.5	3.1%	-2.6%	7.9%	n/a
2004	234.2	34,456.0	169.1	24,873.9	8.7%	-0.4%	6.8%	1.9%
2005	259.4	37,938.2	181.6	26,551.8	7.4%	0.9%	5.6%	1.7%
2006	286.2	41,456.1	193.5	28,028.2	7.0%	2.0%	4.8%	1.4%
2007	313.0	45,106.1	211.6	30,494.6	6.5%	2.0%	4.0%	1.2%
2008	325.8	46,777.4	219.3	31,487.9	2.1%	4.3%	3.5%	1.0%
2009	319.8	45,706.2	214.0	30,594.0	-2.5%	0.6%	5.3%	0.7%
2010	345.5	48,996.0	228.6	32,421.4	6.8%	2.3%	4.3%	0.6%
2011	369.7	51,998.8	248.5	34,955.1	4.8%	5.3%	3.4%	0.6%
2012	373.5	52,082.4	262.6	36,623.7	1.7%	4.1%	3.3%	0.5%
2013	385.4	53,453.6	275.7	38,233.4	3.1%	4.3%	3.4%	0.5%
2014	396.0	54,604.9	291.5	40,185.3	2.8%	4.4%	3.3%	0.1%
2015	411.3	56,266.9	309.4	42,325.4	2.4%	3.0%	3.3%	0.1%
2016	419.8	56,903.2	320.9	43,488.2	2.2%	2.4%	3.4%	0.1%
2017	442.4	59,667.9	341.3	46,025.7	3.8%	1.5%	3.1%	0.1%
2018	465.9	62,220.8	361.7	48,310.0	2.8%	2.4%	2.8%	0.1%
2019	466.3	61,999.4	363.1	48,274.9	-1.7%	2.9%	2.9%	0.3%
2020	441.0	59,380.4	344.9	46,443.6	-6.5%	0.3%	5.8%	1.0%
2021	488.5	65,980.6	369.2	49,865.4	6.3%	1.6%	5.2%	2.1%
2022	518.7	69,987.0	368.4	49,699.6	-0.9%	1.9%	4.5%	3.3%
2023	558.4	75,134.8	387.5	52,132.1	3.9%	2.4%	4.0%	4.3%
2024	587.1	78,651.5	406.7	54,494.0	3.0%	2.5%	3.7%	4.7%
2025	615.2	81,952.1	427.3	56,912.0	2.9%	2.5%	3.4%	4.8%
2026	644.9	85,404.0	449.4	59,514.7	2.9%	2.5%	3.1%	4.7%
2027	675.8	88,978.9	471.0	62,015.3	2.8%	2.5%	2.9%	5.4%

Close

Trade

Selective data in HK$ for Main Countries/Territories (2022)

• Total Trade: $9,459.1 billion −7.9% year-on-year, trade balance −$347.1 billion
  • With mainland China: $4,648.4 billion (49.1% share), −13.7% year-on-year
  • With Taiwan: $741.6 billion (7.8% share), +7.3% year-on-year
  • With the United States: $502.1 billion (5.3% share), −2.8% year-on-year
  • With Singapore: $481.2 billion (5.1% share), −0.5% year-on-year
  • With South Korea: $371.2 billion (3.9% share), −7.0% year-on-year
  • With Japan: $345.3 billion (3.7% share), −11.4% year-on-year
  • With Vietnam: $256.3 billion (2.7% share), +16.0% year-on-year
  • With India: $252.4 billion (2.7% share), +17.7% year-on-year
• Imports: $4,927.5 billion −7.2% year-on-year
  • From mainland China: $2,077.7 billion (42.2% share), −14.6% year-on-year
  • From Taiwan: $587.4 billion (11.9% share), +7.3% year-on-year
  • From Singapore: $398.5 billion (8.1% share), −3.7% year-on-year
  • From South Korea: $289.8 billion (5.9% share), −10.7% year-on-year
  • From Japan: $242.8 billion (4.9% share), −10.4% year-on-year
  • From the United States: $209.4 billion (4.3% share), +1.3% year-on-year
  • From Malaysia: $176.9 billion (3.6% share), +6.1% year-on-year
  • From Vietnam: $143.9 billion (2.9% share), +22.3% year-on-year
• Exports: $4,531.7 billion −8.6% year-on-year
  • To mainland China: $2,570.8 billion (56.7% share), −12.9% year-on-year
  • To the United States: $292.7 billion (6.5% share), −5.5% year-on-year
  • To India: $171.7 billion (3.8% share), +29.0% year-on-year
  • To Taiwan: $154.2 billion (3.4% share), +7.2% year-on-year
  • To Vietnam: $112.4 billion (2.5% share), +8.9% year-on-year
  • To Japan: $102.5 billion (2.3% share), −13.8% year-on-year
  • To the United Arab Emirates : $95.0 billion (2.1% share), +35.3% year-on-year
  • To Singapore: $82.9 billion (1.8% share), +18.6% year-on-year

Source:^[5]

Trade with Macau

See also: Hong Kong–Macau relations and Economy of Macau

As at 2015, Macau is Hong Kong's second largest export destination, occupying 6.1% of Hong Kong's total exports.^[72] The amount of export totaled US$8.4B, with broadcasting equipment, jewelry, and precious metal watches as the major products.^[73] On the other hand, Hong Kong is Macau's largest export destination.^[74] Totaled USD 774M, with precious metal watches, jewelry, trunks and cases as the major trading products, the exports to the Hong Kong forms 53% of Macau's total exports.^[75] Since 2018, Hong Kong and Macau have been connected via road by the Hong Kong–Zhuhai–Macau Bridge.

Trade with Guangdong

See also: Guangdong–Hong Kong–Macao Greater Bay Area

The Guangdong–Hong Kong–Macao Greater Bay Area (GBA) is a high-level strategic city cluster comprising two Special Administrative Regions (Hong Kong and Macao) and nine cities in Guangdong Province. With a population exceeding 87 million and a GDP over RMB14.5 trillion (2024), it serves as a combined technology, financial, and logistics innovation hub. Bordering Hong Kong, the mainland Chinese province provides manufacturing capabilities, while Hong Kong acts as a financial, transportation, and professional services hub which boosted the commercialization of technology.^{[citation needed]}

The international poverty line is a monetary threshold under which an individual is considered to be living in poverty. This threshold is calculated using Purchasing Power Parity.^{[citation needed]} According to the World Bank, the international poverty line was most recently updated in October 2015, in which it was increased from $1.25 per day to $1.90 per day using the value of 2011 dollars.^[76] Raising this threshold helps account for changes in costs of living, which directly effects individuals ability to obtain basic necessities across countries.^{[citation needed]}

Recent figures show that 1.37 million people are living below the poverty line and struggling to survive on HK$4,000 (US$510) per month for a one-person household, HK$9,800 for a two-person household earning, and HK$15,000 or a three-person household.^[77] The poverty rate in Hong Kong hit a high of 20.1%, but recent efforts by government programs have lowered this number to 14.7%.^[78]

In December 2012, the Commission on Poverty (CoP) was reinstated to prevent and alleviate poverty with three primary functions; analyze the poverty situation, assist policy formulation and to assess policy effectiveness. Cash handouts have been credited with alleviating much of the poverty, but the extent in which poverty has been alleviated is still questionable. Although cash handouts raise households above the poverty line, they are still struggling to meet certain standards as the cost of living in Hong Kong steadily increases.^[79]

Coupled with these cash payments, statutory minimum wage is set to increase for a second time in the past 10 years. Statutory Minimum Wage (SMW) came into existence on 1 May 2011 and the SMW rate has been HK$34.5 per hour since May 2017. The Legislative Council in Hong Kong most recently approved the revision on the SMW rate to increase to HK$37.5 per hour, effective 1 May 2019.^{[80][non-primary source needed]} Although the total statistics for Hong Kong show declining poverty, child poverty increased .3 percentage points from 2017 to 2018, up to a total of 23.1%, as a result of larger households due to children staying with their elderly parents.^[81] With economic growth projected to slow in the coming years, poverty becomes an increasingly pressing issue.^[81]

One of the largest issues affecting low income families is the availability of affordable housing. Over the past decade, residential Hong Kong property prices have increased close to 242%, with growth finally starting to decelerate in 2019.^[82] Considering housing is a basic necessity, prices have continuously increased while disposable incomes remain virtually unchanged. As the amount of affordable housing diminishes, it has become much harder for families to find homes in their home country. Public housing programs have been implemented by the government, but delayed construction and growing waitlists have not helped to the extent they planned for. Recent results from a Hong Kong think tank show that by 2022, the average citizen could wait up to 6 years for public housing.^[83] Evidence shows that the availability of affordable housing has declined, forcing households to spend more on shelter and less on other necessities. These issues can lead to worse living conditions and imbalanced diets, both of which pose problems beyond just financial well-being.^{[citation needed]}