THE UNITED STATES AND THE HONG KONG SPECIAL ADMINISTRATIVE REGION
SOME IMPORTANT FACTS
The Hong Kong Special Administrative Region (HKSAR) of the People's Republic of China (PRC) is firmly committed to an open market policy which applies to all trade, as well as to all investments in the HKSAR.
Hong Kong has been a Special Administrative Region of the PRC 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 which ensures the continuation of Hong Kong's capitalist economic and trade systems, and the free movement of goods and capital. Hong Kong remains a free port and a separate customs territory with its own customs boundary. Tariff preferences and other similar arrangements obtained by the HKSAR continue to be enjoyed exclusively by the HKSAR. The Basic Law also provides that the HKSAR may participate in relevant international organisations and international trade agreements under the name of "Hong Kong, China".
In 1986, Hong Kong became a separate contracting party to the General Agreement on Tariffs and Trade (GATT). Accordingly, Hong Kong was one of the founding 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 the World Customs Organization) in 1987 and the Asia-Pacific Economic Cooperation in 1991. After 1 July 1997, Hong Kong's status in these and other international organisations remains unchanged except that our participation is now under the name of "Hong Kong, China".
HONG KONG'S ECONOMY IN 2015
The economy of Hong Kong is externally oriented and highly dependent on trade with the rest of the world. Hong Kong economy grew modestly, with real Gross Domestic Product (GDP) growing by 2.4% in 2015. The value of total merchandise trade amounted to US$987 billion (319% of GDP) with imports and exports at US$522 billion (169% of GDP) and US$465 billion (150% of GDP) respectively. In the same year, Hong Kong was the world's 8th largest trading economy in goods – the 7th largest exporter and the 7th largest importer.
The services sector continues to be very important to the Hong Kong economy. It contributed 93% to the GDP in 2014 and accounted for 88% of the total employment in 2015. Hong Kong's trade in services amounted to US$199 billion (64% of GDP) in 2015. In the same year, Hong Kong was the world's 16th largest commercial services trading economy – the 14th largest services exporter and the 17th largest services importer.
FACT 1 :
HONG KONG IS AN IMPORTANT MARKET FOR AMERICAN GOODS
- The United States (US) was Hong Kong's 2nd largest trading partner in the world. Bilateral merchandise trade decreased by 1.4% in 2015.
- As Hong Kong's 5th largest supplier, goods imported from the US registered an average annual rate of -0.1% in value since 2011. They accounted for 5% (US$27 billion) of Hong Kong's total imports in 2015.
- Hong Kong was the US' 20th largest trading partner, 9th largest export, and 37th largest source of imports in 2015.
- Hong Kong was US' 5th largest market for beef and veal exports and 7th largest market for agricultural products in 2015. Other major exports from the US to Hong Kong in 2015 were electrical machinery, apparatus and appliances, and electrical parts thereof; telecommunications equipment; and non-metallic mineral manufactures.
FACT 2 :
HONG KONG IS AN IMPORTANT LOCATION FOR US INTERESTS
- Hong Kong is ideally located in relation to the Pacific Rim and the Mainland of China (Mainland China).
- US nationals represent one of the most significant foreign presence in Hong Kong. In 2015, there were around 85 000 US residents in Hong Kong and 1.2 million US visitor arrivals to Hong Kong.
- Hong Kong welcomes overseas investment and offers an environment in which there is a free flow of capital and return on investment without exchange controls.
- As at 1 June 2015, there were 307 regional headquarters, 505 regional offices and 556 local offices in Hong Kong representing their parent companies located in the US.
- Notable US companies represented in Hong Kong include 3M, Apple, AT&T, Baker & McKenzie, Baker Botts LLP, Bigfoot Entertainment, Bloomberg, Chevron, Cisco, Coach, Dell, Deloitte Touche Tohmatsu, Dow Chemical, EMC, Estee Lauder, ExxonMobil, Facebook, Fedex, Gap, Gemological Institute of America, General Electric, Google, Hewlett-Packard Enterprise, HP Inc., IBM, Intel, Johnson & Johnson, Jones Day, Kaplan Education, LinkedIn, Marriott International, Mayer Brown, McDonald's, Microsoft, Motorola, New Balance, Oracle, Pace Gallery, Procter & Gamble, Ralph Lauren, Skechers, Starbucks, Time Inc., Time Warner, United Parcel Service, University of Chicago Booth School of Business, VF Corporation, Waggener Edstrom Worldwide, Walt Disney and Yahoo!.
- Several states, including Florida, Illinois, Missouri, North Carolina, South Carolina and Virginia, have set up representative offices in Hong Kong. In addition, the port authorities of Georgia, Houston, Long Beach, South Carolina, Tacoma and Virginia maintain a presence in Hong Kong.
- The US has made substantial inward direct investment in Hong Kong. As at end-2014, the position of inward direct investment from the US amounted to US$49.6 billion at market price. The US was an important source of inward direct investment in both the financing (except banking, investment and holding companies) sector and the transportation, storage, postal and courier services sector. In addition to bringing in capital, these investments also enhanced technological upgrading of the industries concerned.
- As one of the world's major financial centres, banking is the lynchpin of Hong Kong's financial activities in which US financial institutions play an active part. This is reflected by the number of US financial institutions operating in Hong Kong. As at end-2015, ten out of the 157 licensed banks, and six out of the 24 restricted licence banks and two out of 64 local representative offices in Hong Kong were owned by US interests. The total assets of and customer deposits with US banks and deposit-taking companies was around US$131 billion and US$62 billion respectively, representing around 5% and 5% of the total of Hong Kong's banking sector.
- US banks in Hong Kong include Bank of America, Cathay Bank, Citibank, East West Bank, JPMorgan Chase Bank, State Street Bank and Trust Company, The Bank of New York Mellon, and Wells Fargo Bank. Goldman Sachs has recently been authorised to establish a restricted licence bank incorporated in Hong Kong.
- In the insurance sector, US companies rank 2nd in number among foreign insurers operating in Hong Kong. Of the 160 insurance companies authorised in Hong Kong, 11 are US companies. Another 13 are known to be controlled by US interests.
- US insurers in Hong Kong include members of the American International Group, Chubb Group, the MassMutual Financial Group and the MetLife Group.
- US companies also participate actively in securities and futures trading, investment advice, fund management and credit rating in Hong Kong. These companies include Citigroup, Fidelity, Franklin Templeton, Goldman Sachs, J.P. Morgan, Bank of America Merrill Lynch, Morgan Stanley, Standard & Poor's, State Street Bank and Trust Company, and Moody's.
- Hong Kong is home to the fifth Disney themed resort. The Hong Kong Disneyland Resort (HKDL) is owned by a joint venture company set up by the HKSAR Government and The Walt Disney Company. Since its opening in September 2005, the Hong Kong Disneyland Park has received over 58 million visitors.
- The HKDL launched the 10th Anniversary Celebration in late 2015 and a series of new "Star Wars"-themed offerings in mid-2016. A new themed area based on Marvel's "Iron Man" franchise and a new hotel with a theme dedicated to the spirit of exploration will open in end-2016 and 2017 respectively.
- The US also derives considerable benefits from its air traffic rights in Hong Kong. The 10 US-based airlines which operate scheduled services to and from Hong Kong are American Airlines, Atlas Air, Delta Air Lines, Federal Express, Kalitta Air, Polar Air Cargo Worldwide, Sky Lease I, Southern Air, United Air Lines and United Parcel Service.
FACT 3 :
THE US IS AN IMPORTANT MARKET FOR HONG KONG GOODS
- The US was the 2nd largest market for Hong Kong's domestic exports, accounting for US$503 million or 8% of the total value in 2015.
- Hong Kong's major domestic export items to the US in 2015 included jewellery, miscellaneous edible products and preparations, wearing apparel and electrical machinery.
FACT 4 :
HONG KONG IS AN IMPORTANT ENTREPÔT FOR SINO-US TRADE
- Hong Kong is an important entrepôt for merchandise trade between the US and Mainland China. In 2015, around 9% (US$38 billion) of Mainland China's exports to the US, and around 6% (US$9 billion) of Mainland China's imports from the US, were routed through Hong Kong.
FACT 5 :
HONG KONG PRACTISES FREE TRADE
- Hong Kong is a staunch supporter of the multilateral trading system and adheres to the WTO/GATT principles of non-discrimination and most-favoured-nation treatment. Hong Kong takes seriously its rights and obligations as a member of the WTO. Our free trade policy applies to both merchandise trade as well as trade in services.
- Hong Kong has been consistently ranked as the world's freest economy by the Heritage Foundation, the Fraser Institute of Canada and the Cato Institute of the United States.
- Hong Kong does not maintain any barriers to trade.
- Hong Kong does not levy any tariffs. Excise duties are levied on four types of commodities, namely tobacco, liquors, methyl alcohol and hydrocarbon oil. In 2015, around 1.2% of our total imports were subject to excise duties.
- Hong Kong does not subsidise its exports.
- Imports from the US compete freely with locally-made products and imports from Hong Kong's other trading partners.
- Hong Kong treats foreign and local companies on the same footing. All companies, foreign or local, benefit from the government's policy of providing an efficient business environment and supporting infrastructure, including good communications; efficient port and airport facilities; a stable currency free from exchange controls; a simple tax structure and low tax rates; and an established legal and judicial system.
FACT 6 :
HONG KONG RESPECTS INTELLECTUAL PROPERTY RIGHTS
- Hong Kong has an established legal framework for the protection of intellectual property (IP) rights including patents, trade marks, copyright and registered designs. We update our IP laws from time to time to meet our prevailing economic needs. In June 2016, the Legislative Council passed the Patents (Amendment) Bill 2015 which is a major step to reform our local patent system.
- The Hong Kong Customs has a strong and dedicated team comprising 250 officers to enforce criminal sanctions against IP rights infringements. Another 3 700 officers are responsible for intelligence analysis and interception of contraband, including pirated and counterfeit goods at entry and exit points. The vigorous and sustained enforcement efforts have brought infringement situation in Hong Kong under firm control.
FACT 7 :
HONG KONG'S LABOUR FORCE IS PROTECTED BY LEGISLATION
- Hong Kong's labour force enjoys rights and benefits that are protected by a comprehensive set of labour legislation and an effective labour inspection system. This has enabled Hong Kong to apply 41 International Labour Conventions which prescribe internationally recognised standards on various labour matters.
ECONOMIC AND TRADE OFFICES
Hong Kong has three Economic and Trade Offices in the US. They are situated in Washington DC, New York and San Francisco. They represent Hong Kong on matters related to economy and trade in the US, and help foster trade and commercial ties between Hong Kong and the US. Their webpages are:
- Washington DC : http://www.hketowashington.gov.hk
- New York : http://www.hketony.gov.hk
- San Francisco : http://www.hketosf.gov.hk
Trade and Industry Department
The Government of the Hong Kong
Special Administrative Region
Trade and Industry Tower,
3 Concorde Road, Kowloon City,
Telephone: (852) 2398 5405
Note: While every effort is made to ensure the accuracy of the above information, the Department cannot guarantee this to be so and will not be held liable for any reliance placed on the same.