Its economy is governed under positive non-interventionism, and is highly dependent on international trade and finance. For this reason it is regarded as among the most favorable places to start a company. In fact, a recent study shows that Hong Kong has come from 998 registered start-ups in 2014 to over 2800 in 2018, with eCommerce (22%), Fintech (12%), Software (12%) and Advertising (11%) companies comprising the majority.[23] The Economic Freedom of the World Index lists Hong Kong as the freest economy, with a score of 8.58 based on data from 2022.[24]
Hong Kong's economic strengths 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 Healy Consultants, Hong Kong has the most attractive business environment within East Asia, in terms of attracting foreign direct investment (FDI).[37] In 2013, 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]
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
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 Indexwas 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.[45] 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.[46]
In 2020, Hong Kong was ranked as the world's second-freest economy after Singapore in the Index of Economic Freedom, published by The Heritage Foundation.[47][48] The index measures restrictions on business, trade, investment, finance, property rights and labour, and considers the impact of corruption, government size and monetary controls in 183 economies. Hong Kong is the only economy to have scored 90 points or above on the 100-point scale, achieved in 2014 and 2018.[49]
In 2021, The Heritage Foundation removed Hong Kong as a separate entity from China from its list of freest economics of the world, citing increasing interference from the Chinese government in Hong Kong's governmental system and democratic process. With this, Hong Kong, along with Macao, lost a position they had held in the index since the index's inception in 1995. At the time of the removal from the index, the founder of the Heritage Foundation indicated that while the SARs "offer their citizens more economic freedom than is available to the average citizen of China", these economic policies are still "ultimately controlled from Beijing".[50] On the other hand, the Canadian-based Fraser Institute continues to rank Hong Kong as the freest territory as late as 2024 (based on data from 2022).
On March 19, 2024, the Basic Law Article 23 (Article 23 law) was officially promulgated and took effect on March 23, 2024. The central and local government believe that this law, which safeguards national security as Article 23 states, will enable Hong Kong to transition from stability to prosperity. Zheng Yanxiong, Director of the Central Government's Liaison Office, stated that the city can now fully commit to developing the economy and improving the livelihoods of residents, thanks to the "iron wall" of its domestic national security law.[51]
Economic data
Development of real GDP per capita in Hong Kong, Taiwan and Mainland China
The following table shows the main economic indicators in 1980–2021 (with IMF staff estimates in 2022–2027). Inflation below 5% is in green.[52]
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%
GDP
GDP – nominal (2022): HK$2,818,046 million
GDP – nominal in US$ (2022): $359,812 million
GDP – real growth rate (2022): −3.5%
GDP – per capita (2022): HK$383,611
GDP – per capita US$ (2022): $48,980
GDP – composition by sector (2022):
Financing and insurance: 21.3%
Import/export, wholesale and retail trades: 19.4%
Real estate, professional and business services: 9.1%
Public administration, social and personal services: 20.5%
As at 2015, Macau is Hong Kong's second largest export destination, occupying 6.1% of Hong Kong's total exports.[55] The amount of export totaled US$8.4B, with broadcasting equipment, jewelry, and precious metal watches as the major products.[56] On the other hand, Hong Kong is Macau's largest export destination.[57] 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.[58] Since 2018, Hong Kong and Macau have been connected via road by the Hong Kong–Zhuhai–Macau Bridge.
Poverty
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.[59] 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.[60] Raising this threshold helps account for changes in costs of living, which directly effects individuals ability to obtain basic necessities across countries.
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.[61] 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%.[62]
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.
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.[63] 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.[64] With economic growth projected to slow in the coming years, poverty becomes an increasingly pressing issue.[64]
Beyond benefiting the younger generation through cash handouts and minimum wage increases, expanded elderly allowances have been implemented to increase disposable incomes of the elderly population that can no longer work. As of 1 February 2019 the amount payable per month for eligible elderly population became HK$1,385 in an effort to raise households incomes living with elderly tenants. Although Hong Kong has become one of the largest growing cities in the world, much of the population is struggling to keep up with the rising costs of living.
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.[65] 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.[66] 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.
The Hong Kong Stock Exchange is the sixth largest in the world, with a market capitalisation of about US$3.732 trillion as of mid-2017. In 2006, the value of initial public offerings (IPO) conducted in Hong Kong was second highest in the world after London.[67] In 2009, Hong Kong raised 22 percent of IPO capital, becoming the largest centre of IPOs in the world.[68] The exchange is the world's 10th largest by turnover and third largest in China.[a][citation needed]
The economy of Canada is a highly developed mixed economy, with the world's ninth-largest economy as of 2024, and a nominal GDP of approximately US$2.117 trillion. Canada is one of the world's largest trading nations, with a highly globalized economy. In 2021, Canadian trade in goods and services reached $2.016 trillion. Canada's exports totalled over $637 billion, while its imported goods were worth over $631 billion, of which approximately $391 billion originated from the United States. In 2018, Canada had a trade deficit in goods of $22 billion and a trade deficit in services of $25 billion. The Toronto Stock Exchange is the tenth-largest stock exchange in the world by market capitalization, listing over 1,500 companies with a combined market capitalization of over US$3 trillion.
The economy of Ecuador is the eighth largest in Latin America and the 69th largest in the world by total GDP. Ecuador's economy is based on the export of oil, bananas, shrimp, gold, other primary agricultural products and money transfers from Ecuadorian emigrants employed abroad. In 2017, remittances constituted 2.7% of Ecuador's GDP. The total trade amounted to 42% of the Ecuador's GDP in 2017.
The economy of Indonesia is a mixed economy with dirigiste characteristics, and it is one of the emerging market economies in the world and the largest in Southeast Asia. As an upper-middle income country and member of the G20, Indonesia is classified as a newly industrialized country. Indonesia nominal GDP reached 20.892 quadrillion rupiah in 2023, it is the 16th largest economy in the world by nominal GDP and the 7th largest in terms of GDP (PPP). Indonesia's internet economy reached US$77 billion in 2022, and is expected to cross the US$130 billion mark by 2025. Indonesia depends on the domestic market and government budget spending and its ownership of state-owned enterprises. The administration of prices of a range of basic goods also plays a significant role in Indonesia's market economy. However, micro, medium and small companies contribute around 61.7% of the economy and significant major private owned companies and foreign companies are also present
The economy of Macau is a highly developed market economy. Macau's economy has remained one of the most open in the world since its handover to China in 1999. Apparel exports and gambling-related tourism are mainstays of the economy. Since Macau has little arable land and few natural resources, it depends on mainland China for most of its food, fresh water, and energy imports. Japan and Hong Kong are the main suppliers of raw materials and capital goods. Although Macau was hit hard by the 1997–98 Asian financial crisis and the early 2000s recession, its economy grew approximately 13.1% annually on average between 2001 and 2006. Macau is a full Member of the World Trade Organization. Public security has greatly improved after handover to the People's Republic of China. With the tax revenue from the profitable gambling industry, the Macau government is able to introduce the social welfare program of 15 years of free education to all Macau citizens. In 2015, Macau's economy saw a sharp decrease due to the reduced spending by visitors from Mainland China since the Anti-corruption campaign under Xi Jinping.
The economy of Mauritius is a mixed developing economy based on agriculture, exports, financial services, and tourism. Since the 1980s, the government of Mauritius has sought to diversify the country's economy beyond its dependence on just agriculture, particularly sugar production.
The economy of Pakistan is categorized as a developing economy. It ranks as the 24th-largest based on GDP using purchasing power parity (PPP) and the 46th largest in terms of nominal GDP. With a population of 241.5 million people as of 2023, Pakistan's position at per capita income ranks 161st by GDP (nominal) and 138th by GDP (PPP) according to the International Monetary Fund (IMF).
The economy of the Republic of the Congo is a mixture of subsistence hunting and agriculture, an industrial sector based largely on petroleum extraction and support services. Government spending is characterized by budget problems and overstaffing. Petroleum has supplanted forestry as the mainstay of the economy, providing a major share of government revenues and exports. Nowadays the Republic of the Congo is increasingly converting natural gas to electricity rather than burning it, greatly improving energy prospects.
The economy of Thailand is dependent on exports, which accounted in 2021 for about 58 per cent of the country's gross domestic product (GDP). Thailand itself is a newly industrialized country, with a GDP of 17.922 trillion baht (US$514.8 billion) in 2023, the 9th largest economy in Asia. As of 2018, Thailand has an average inflation of 1.06% and an account surplus of 7.5% of the country's GDP. Its currency, the baht, is ranked as the tenth most frequently used world payment currency in 2017.
The Four Asian Tigers are the developed Asian economies of Hong Kong, Singapore, South Korea, and Taiwan. Between the early 1950s and 1990s, they underwent rapid industrialization and maintained exceptionally high growth rates of more than 7 percent a year.
The 1997 Asian financial crisis was a period of financial crisis that gripped much of East and Southeast Asia during the late 1990s. The crisis began in Thailand in July 1997 before spreading to several other countries with a ripple effect, raising fears of a worldwide economic meltdown due to financial contagion. However, the recovery in 1998–1999 was rapid, and worries of a meltdown quickly subsided.
The Hong Kong dollar is the official currency of Hong Kong. It is subdivided into 100 cents. Historically, it was also subdivided into 1000 mils. The Hong Kong Monetary Authority is the monetary authority of Hong Kong and the Hong Kong dollar.
The Index of Economic Freedom is an annual index and ranking created in 1995 by The Heritage Foundation and The Wall Street Journal to measure the degree of economic freedom in the world's nations. The creators of the index assert that they take an approach inspired by Adam Smith's The Wealth of Nations, that "basic institutions that protect the liberty of individuals to pursue their own economic interests result in greater prosperity for the larger society".
The Hong Kong Monetary Authority (HKMA) is the central banking institution of Hong Kong. It is a government authority founded on 1 April 1993 when the Office of the Exchange Fund and the Office of the Commissioner of Banking merged. The organisation reports directly to the Financial Secretary.
The economy of Asia comprises about 4.7 billion people living in 50 different nations. Asia is the fastest growing economic region, as well as the largest continental economy by both GDP Nominal and PPP in the world. Moreover, Asia is the site of some of the world's longest modern economic booms.
The economy of East Asia comprises 1.6 billion people living in six different countries and regions. The region includes several of the world's largest and most prosperous economies: Taiwan, Japan, South Korea, China, Hong Kong, and Macau. It is home to some of the most economically dynamic places in the world, being the site of some of the world's most extended modern economic booms, including the Taiwan miracle (1950–present) in Taiwan, Miracle on the Han River (1974–present) in South Korea, Japanese economic miracle (1950–1990) and the Chinese economic miracle (1983–2010) in China.
The economy of the People's Republic of China is a developing mixed socialist market economy, incorporating industrial policies and strategic five-year plans. China is the world's second largest economy by nominal GDP, behind the United States, and since 2017 has been the world's largest economy when measured by purchasing power parity (PPP). China accounted for 19% of the global economy in 2022 in PPP terms, and around 18% in nominal terms in 2022. The economy consists of state-owned enterprises (SOEs) and mixed-ownership enterprises, as well as a large domestic private sector which contribute approximately 60% of the GDP, 80% of urban employment and 90% of new jobs, the system also consist of a high degree of openness to foreign businesses. According to the annual data of major economic indicators released by the National Bureau of Statistics since 1952, China's GDP grew by an average of 6.17% per year in the 26 years from 1953 to 1978. China implemented economic reform in 1978, and from 1979 to 2023, the country's GDP growth rate grew by an average of 8.93% per year in the 45 years since its implementing economic reform. According to preliminary data released by the authorities, China's GDP in 2023 was CN¥126.06 trillion with a real GDP increase of at least 5.2% from 2022.
While beginning in the United States, the Great Recession spread to Asia rapidly and has affected much of the region.
↑ "Gross domestic product (2009)"(PDF). The World Bank: World Development Indicators database. World Bank. 27 September 2010. Archived(PDF) from the original on 12 September 2009. Retrieved 5 October 2010.
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7,498,100 (2023) [3] 
$633.6 billion (31 December 2017 est.) [6] 
