From the Commissioner
It was an auspicious start to the year as Hong Kong was ranked the world’s freest economy for the 16th consecutive year by The Heritage Foundation and The Wall Street Journal.
The ranking is an acknowledgment of Hong Kong’s prudent economic policies, adherence to the rule of law, and resolute commitment to free market principles, particularly during adverse economic times.
Such accolades help to illustrate the successful implementation of the “One Country, Two Systems” principle.
Over the past two years, we have seen governments around the world take unprecedented steps to lessen the impact of the global economic crisis.
While the Hong Kong economy remained vibrant in 2009, as an externally oriented economy it was not immune to the effects of the crisis.
In response, Hong Kong spent over US$11 billion on economic stimulus measures. We also took steps to guarantee bank deposits, provide additional capital to the banking sector if required, and support small- and medium-sized enterprises.
These measures, coupled with healthy economic growth in the Mainland of China and the gradual recovery of the global economy, cushioned the severity of the crisis. Despite a severe contraction in the first quarter of last year, we have witnessed notable growth in our exports and retail sales in the last few months which lead to growth of 2.6% in the final quarter of 2009.
The labor market has also improved with the unemployment rate falling to 4.9%. And despite the downturn, visitor arrivals for 2009 reached a record high of nearly 30 million.
Our property market ratchet up by 27% in 2009 while our stock market rebounded sharply by 52% last year.
Hong Kong remains the world seventh largest stock market, enjoying a total market capitalization of US$2.3 trillion at the end of last year. And we ranked first in the world in terms of IPO funds raised in 2009.
Our wine market also experienced spectacular growth last year following the removal of wine duty in early 2008. Compared to 2008, wine imports in 2009 leaped 41% to US$517 million. Hong Kong also became the second largest wine auction center in the world after New York.
Hong Kong’s economy contracted by 2.7% in 2009 as a whole. Riding on the global economic recovery, particularly in Asia, we forecast GDP to grow by 4% to 5% this year. Given the fragile nature of the global recovery, our government will continue to introduce special measures, amounting to over US$2.6 billion, this year to provide relief to the community and to consolidate our economic recovery.
Our robust growth owes much to new market opportunities emerging out of developments in the Mainland. Since last September, two Hong Kong banks have started issuing Renminbi bonds in Hong Kong. A pilot program has also been introduced since last summer to allow select Mainland companies to settle cross-boundary trade with Hong Kong in Renminbi.
Another notable investment aimed to augment our tourism infrastructure is the construction of a new cruise terminal capable of handling the new generation of mega cruise liners. We are on target to commission the first berth in 2013.
Hong Kong is also working with our neighbors in the Pan Pearl River Delta to develop a regional transport system which will integrate with the Mainland’s high-speed rail link network. The enhanced infrastructure links will allow Hong Kong to more fully capitalize on the Mainland’s economic growth by facilitating the movement of goods and people.
Hong Kong continues to bolster its soft infrastructure by enhancing its arts, culture, and creative industries. Among the major programs under planning is the development of the 100-acre West Kowloon Cultural District which will comprise concert halls, theaters and a contemporary arts museum. Upon completion in 2014/15, Hong Kong will become a major regional art and cultural hub.
Looking ahead, Hong Kong will continue to reinforce the traditional four pillars of our economy; namely, financial services, tourism, trade and logistics, and professional services.
To maintain our competitiveness, we are also forging ahead to exploit six areas where Hong Kong enjoys competitive advantages: testing and certification, medical services, cultural and creative content, innovation and technology, environmental industry and education services.
New land sites have been reserved for building private hospitals and self-financing colleges. To promote innovation and technology, we will develop Science Park Phase 3 next year. Upon full completion in 2016, it will provide an additional 4,000 R&D-related jobs. We will invest an additional US$110 million each year in the coming five years for art program development, enhancement of art education, and manpower training which is essential to support the development of the West Kowloon Cultural District. We also plan to allocate additional resources to encourage our public transportation industry to adopt more innovative green technologies and to phase out old diesel commercial vehicles.
By capitalizing on the potential of these industries, we will broaden our economic base, promote sustainable economic growth and cultivate a knowledge-based economy. Hong Kong has long maintained a level playing field and we certainly welcome U.S. investment in these areas.
On constitutional development, the Hong Kong government published a consultation paper last November on the electoral arrangements for the Chief Executive and the Legislative Council in 2012. The public consultation, which ended in February, aimed at broadening the scope of political participation and increasing the democratic elements in the 2012 elections in accordance with the Basic Law.
It is the aspiration of the Hong Kong people and the government that the 2012 electoral arrangements pave the way for universal suffrage for the Chief Executive in 2017 and the legislature in 2020.
Donald Tong
Hong Kong Commissioner, USA
HONG KONG ECONOMIC AND TRADE OFFICE IN WASHINGTON D.C.
1520 18th Street, N.W., Washington, DC 20036
Tel: (202)331-8947 Fax: (202)331-8958
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Copyright @ 2003, Hong Kong Economic and Trade Office in Washington D.C.
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