The Hong Kong Special Administrative Region (HKSAR) of the People's Republic of China is firmly committed to an open market policy. This policy applies to all trade, as well as to all investments in the HKSAR.

Hong Kong has become a Special Administrative Region of the People's Republic of China since 1 July 1997. The "One Country, Two Systems" principle provides the HKSAR with a high degree of autonomy in economic, trade, financial and monetary matters. This is guaranteed by the Basic Law, the mini-constitution of the HKSAR, which ensures that the important elements making Hong Kong a regional business and financial centre will extend well beyond 1997, including continuation of capitalist economic and trade systems, free movement of goods and capital, and status as a free port and separate customs territory. Tariff preferences and other similar arrangements obtained by the HKSAR will be enjoyed exclusively by the HKSAR. The Basic Law also provides that the HKSAR may participate in relevant international organizations and international trade agreements under the name "Hong Kong, China".

In 1986, Hong Kong became a separate contracting party to the General Agreement on Tariffs and Trade (GATT). Hong Kong was one of the original members of the World Trade Organization (WTO) when it was established on 1 January 1995. Hong Kong also became a member of the Customs Cooperation Council (subsequently renamed as the World Customs Organization) in 1987 and the Asia-Pacific Economic Cooperation (APEC) in 1991. The status of the HKSAR in these and other international organizations remains unchanged except that our participation is now under the name "Hong Kong, China".

Trade Relations with Japan

• Hong Kong and Japan enjoy a close trading relationship. In 2010, Japan was Hong Kong's 3^rd largest trading partner; 6^th largest market for domestic exports and 3^rd largest market for re-exports; and 2^nd largest source of imports.

• The average annual growth rate in bilateral trade between Hong Kong and Japan was 3% from 2006 to 2010. The bilateral trade between Hong Kong and Japan increased by 26% from HK$345.2 billion in 2009 to HK$435.8 billion in 2010 (vis-ˆj-vis an increase of 24% for Hong Kong's total trade in 2010 against 2009). 

• Hong Kong is also an important entrepôt for trade between the Mainland of China and Japan. From 2006 to 2010, the average annual growth rate for re-export trade between the Mainland of China and Japan through Hong Kong was 3%. In 2010, such re-export trade increased by 21% to HK$297.5 billion from HK$246.6 billion in 2009 (vis-ˆj-vis an increase of 23% for Hong Kong's total re-exports in 2010 against 2009). 

• Hong Kong's domestic export of goods to Japan totalled about HK$2.0 billion in 2010. The top three domestic export categories to Japan in 2010 were:

• Telecommunication and sound recording and reproducing apparatus and equipment

• Jewellery, goldsmiths' and silversmiths' wares, and other articles of precious or semi-precious materials

• Metalworking machinery

• Hong Kong's re-export of goods to Japan totalled about HK$125.6 billion in 2010. The top three re-export categories to Japan in 2010 were:

• Telecommunications and sound recording and reproducing apparatus and equipment

• Electrical machinery, apparatus and appliances, and electrical parts thereof

• Articles of apparel and clothing accessories

• Hong Kong's import of goods from Japan totalled about HK$308.2 billion in 2010. The top three import categories from Japan in 2010 were:

• Electrical machinery, apparatus and appliances, and electrical parts thereof

• Telecommunications and sound recording and reproducing apparatus and equipment

• Office machines and automatic data processing machines
  

Bilateral Investment

• At the end of 2009, Japan was the 6^th major source of inward direct investment (IDI) into Hong Kong, with an IDI stock of HK$167.8 billion.

• At the end of 2009, Japan was the 20^th major destination of outward direct investment (ODI) from Hong Kong, with an ODI stock of HK$14.4 billion.

• As at 1 June 2010, 224 regional headquarters, 405 regional offices and 456 local offices were set up by Japanese companies in Hong Kong.

• Hong Kong and Japan signed the Investment Promotion and Protection Agreement (IPPA) on 15 May 1997. The Agreement came into force on 18 June 1997. The Agreement further strengthens the excellent trade and economic relations between Japan and Hong Kong.

Regional Cooperation Division
Trade and Industry Department
July 2011