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OVERVIEW
| The Hong Kong Special Administrative Region of the People's Republic of China
(HKSAR) 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 a high degree of autonomy in economic, trade, financial and monetary matters. This is guaranteed by the Sino-British Joint Declaration on Hong Kong and the Basic Law, the
mini-constitution of the
HKSAR, which ensure that the importance of Hong Kong as a regional centre will extend well beyond 1997. They guarantee continuation of Hong Kong's capitalist economic and trade systems, free movement of goods and capital, and its status as a free port and separate customs territory, with its own customs boundary. Export quotas, tariff preferences and other similar arrangements obtained by the HKSAR will be enjoyed exclusively by the
HKSAR. They also provide that the HKSAR may participate in relevant international organizations and international trade agreements under the name of Hong Kong, China. |
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In 1986, Hong Kong became a separate contracting party to the General Agreement on Tariffs and Trade (GATT). Upon the establishment of the World Trade Organization
(WTO) on 1 January 1995, Hong Kong became one of its original members. 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
(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 of Hong Kong, China.
HONG KONG'S ECONOMY IN 2003
The economy of Hong Kong is highly externally oriented and dependent on trade with the rest of the world. In 2003, the value of Hong Kong's total merchandise trade amounted to US$456 billion, or 287% of its Gross Domestic Product (GDP). The value of imports was US$232 billion or 146% of GDP while exports valued at US$224 billion or 141% of GDP. In the same year, Hong Kong remained the world's 11th largest trading entity in goods - both the 11th largest exporter and importer.
The services sector continues to be very important to the Hong Kong economy, with its contribution to GDP amounting to 88% in 2002, slightly up from 87% in 2001. It accounted for 85% of the total employment in 2003. Hong Kong's trade in services, though still lagging behind merchandise trade in value terms, registered robust growth in the past decade. Hong Kong ranked 15th in the world league of commercial services trading entities in 2003 - the 10th largest services exporter and the 20th largest services importer. Total trade in services amounted to US$69 billion, or 44% of GDP in 2003.
Fact 1 :
HONG KONG IS AN IMPORTANT MARKET FOR US GOODS
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The US is the 4th largest source for Hong Kong's imports of goods. In 2003, Hong Kong imported US$13 billion worth of goods from the US, accounting for 5% of the total.
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According to US' exports figures, Hong Kong's imports per capita from the US in 2003 were about US$1,831, substantially more than for example Mexico (US$929), Taiwan (US$774), Australia (US$664), South Korea (US$499), Japan (US$409) and the European Union (US$397).
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Hong Kong is a major export market for US products, in particular :
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Jewelry of precious metal, other than silver (Hong Kong was US' No. 2 market in 2003, with value of exports of US$256 million) |
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Frozen chicken cuts and edible offal (Hong Kong was US' No. 2 market in 2003, with value of exports of US$184 million) |
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Diamonds,
nonindustrial, worked, including polished or drilled (Hong Kong was US' No. 3 market in 2003, with value of exports of US$529 million) |
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Whole raw bovine or equine hides and skins, of weight exceeding 16 kg., fresh pickled or otherwise preserved but not tanned or further prepared (Hong Kong was US' No. 3 market in 2003, with value of exports of US$131 million) |
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Other high value US products exported to Hong Kong in 2003 included electronic monolithic digital integrated circuits (US$1,755 million), electronic monolithic integrated circuits, not digital (US$586 million) and parts and accessories for automated data processing machines (US$517 million).
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Since 1986, the US has become the top ranking supplier of goods to the HKSAR Government. In 2003, the HKSAR Government purchased US$455 million worth of US goods, representing 48% of the total contracts awarded in the year.
Fact 2 :
HONG KONG IS AN IMPORTANT LOCATION FOR US INTERESTS
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More than 50,000 US citizens are residents in Hong Kong, and they now represent one of the most significant foreign presences in Hong Kong.
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Hong Kong is ideally located in relation to the Pacific Rim and the Mainland of China (the Mainland).
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States including Arizona, California, Illinois, Iowa, Mississippi, Nevada, North Carolina, Ohio, Virginia and Wisconsin have set up representative offices in Hong Kong. In addition, port authorities of Georgia, Long Beach, Los Angeles, New York & New Jersey, Portland, Tacoma and Virginia maintain a presence in Hong Kong.
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There are over 1,100 US companies in Hong Kong. Notable US companies represented in Hong Kong include 3M, AOL Time Warner, AT&T,
Autodesk, Boeing, Caltex, Caterpillar, Cisco Systems, Coca-Cola, Compaq Computer, Dell Computer, Dow Chemical,
DuPont, Eastman Kodak, Eli Lilly, Emerson Electric, Exxon Mobil Corporation, General Electric, General Motors, Gillette, Hewlett-Packard, Honeywell, IBM, Intel Semiconductor, Johnson & Johnson, Logitech, Lucent Technologies, McDonald's, Microsoft, Motorola,
Pepsico, Pfizer, Philip Morris, Procter & Gamble, Sears, Sprint, Starbucks, Toys "R" Us, Walt Disney, Whirlpool, WorldCom and Xerox.
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As at June 2003, 740 US firms have set up their regional headquarters/offices in Hong Kong.
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The US has substantial inward direct investment in Hong Kong, amounting to US$23.9 billion at market price at end 2002. The US is in fact the largest source of inward direct investment in insurance and the 2nd largest both in wholesale, retail and import/export trade and in financial institutions (other than banks and deposit-taking companies), accounting for 34%, 15% and 12% respectively of the total inward direct investment to these sectors. These investments not only bring in capital, but also enhance technological upgrading of the concerned industries.
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Hong Kong is one of the world's major financial centres. Banking is the lynchpin of financial activities and US financial institutions play an active part. This is reflected by the number of US financial institutions operating in Hong Kong. At the end of
2003, there were 134 licensed banks of which 11 were US banks. They constituted the
4th largest foreign bank group by number. 7 of the top 10 US banks maintain branch offices in Hong Kong. Apart from licensed banks, there were 9 restricted licence banks and 3 deposit-taking companies that were owned by US interests. The majority of these institutions are engaged actively in money market operations, foreign exchange and securities dealings. A number of them are also active in domestic banking including mortgage lending and trade financing. In addition,
5 US banks have established representative offices in Hong Kong. At the end of
2003, total assets of and customer deposits with US banks and deposit-taking companies stood at
US$71.1 billion and
US$30.7 billion respectively, representing
8.5% and
6.7% of the total of Hong Kong's banking sector.
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US banks in Hong Kong include American Express, Bank of America, Citibank and JPMorgan Chase.
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In the insurance sector, US companies rank 1st in number amongst foreign insurers operating in Hong Kong. Of the 188 insurance companies authorized in Hong Kong, 19 are US companies and 12
(non -US companies) are known to be controlled by US interests.
US insurers authorized to operate in Hong Kong include members of the American International Group and the CIGNA group.
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US companies also participate actively in securities and commodity futures trading, in the field of investment advice and in fund management. These companies include Bear Stearns,
CitiCorp, Fidelity, Franklin Templeton, Goldman Sachs, Lehman Brothers, Merrill Lynch, Morgan Stanley Dean Witter and
Prudential-Bache.
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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.
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Hong Kong will be home to Walt Disney's fifth theme park in the world in 2005. The Hong Kong Disneyland of an estimated project cost of US$1.8 billion is being developed and will be operated by a joint venture company set up by the HKSAR Government and the Walt Disney Company. The park is estimated to generate US$19 billion boost to the Hong Kong economy in 40 years and attract incoming tourists up to 3.4 million in the first year, rising to 7.3 million after 15 years.
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The US also derives considerable benefits from its air traffic rights in Hong Kong. The 11 US-based airlines which operate scheduled services to and from Hong Kong are Atlas Air Inc., Continental Airlines, Continental Micronesia Inc., Evergreen International Airlines, Federal Express, Gemini Air Cargo, Kalitta Air, Northwest Airlines, Polar Air Cargo, United Airlines and United Parcel Service Ltd.
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All foreign companies 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 3 :
THE US IS AN IMPORTANT MARKET FOR HONG KONG GOODS
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In 2003, the US was the largest market for Hong Kong's domestic exports, accounting for US$5 billion, or 32% of the total value.
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Hong Kong's major export items to the US in 2003 included wearing apparel, electrical machinery, office machines and automatic data processing machines, textiles, professional, scientific and controlling instruments and apparatus, photographic apparatus, equipment and supplies and optical goods, etc.
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In 2003, textiles and clothing products accounted for 75% of Hong Kong's domestic exports to the US. 91.4% of such export value were subject to quantitative restrictions. In 2003, the tariffs levied on US' imports of textiles and apparel from Hong Kong averaged at 17.4%.
Fact 4 :
HONG KONG IS AN IMPORTANT ENTREPÔT FOR SINO-US TRADE
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Hong Kong is an important entrepot for trade between the Mainland and the US. It is estimated that in 2003, around 36% or US$33 billion of the Mainland's exports of goods to the US were channelled through Hong Kong. In the opposite direction, around 18% or US$6 billion of the Mainland's imports of goods from the US were also routed through Hong Kong.
Fact 5 :
HONG KONG PRACTISES FREE TRADE
-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.
Same as 2003,
Hong Kong was ranked the world's freest economy in the Heritage Foundation 2004
Index of Economic Freedom and in the Cato Institute's 2004 Annual Report on
Economic Freedom of the World.
Hong Kong does
not subsidize its exports or any particular sector of the economy.
Hong Kong does not levy any tariffs. As an internal tax to raise revenue, excise duties are levied on imported as well as domestically produced cigarettes and tobacco, alcoholic products, methyl alcohol and some hydrocarbon oils. In 2003, only 1% of all imports were subject to excise duties.
Hong Kong treats foreign and local companies on the same footing.
Hong Kong does not maintain any barriers to trade.
Imports from the US can compete freely with locally made products and imports from other countries. In fact, the growth in imports of goods from the US averaged at 2% per annum between 1993 and 2003.
Fact 6 :
HONG KONG RESPECTS INTELLECTUAL PROPERTY RIGHTS
-Related Aspects of Intellectual Property Rights (TRIPS).
The Intellectual Property Department was set up in July 1990 to provide a focal point for the development of intellectual property rights protection in Hong Kong. It administers the registration systems for trade marks, patents, designs and copyright licensing bodies. The Customs and Excise Department is responsible for the enforcement of criminal sanctions against copyright and trade mark infringements.
Hong Kong is determined to have a robust intellectual property regime and maintain our status as a responsible trading partner. Penalties for copyright infringement and trade mark counterfeiting are amongst the stiffest in the world. Customs has a dedicated enforcement team of some 400 officers, one of the strongest in the region. The piracy situation in Hong Kong has been brought under firm control. The result is highly praised by our trading partners including the US.
Hong Kong has
adopted the following legal measures to improve our copyright legislation since
the enactment of a modernized and localized principal Copyright Ordinance in
1997:
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December 1997,
a licensing requirement was introduced for the import and export of optical
disc manufacturing equipment under the Import and Export Ordinance to
complement the Copyright Ordinance and to guard against copyright piracy at
source. |
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May 1998, the Prevention of Copyright Piracy Ordinance was enacted to require all optical disc manufacturers in Hong Kong to be licensed by the Commissioner of Customs and Excise; and all
locally-manufactured optical discs must bear unique identification codes indicating their source of manufacture. From July 2002, the manufacturing of stampers in Hong Kong is also subject to the same licensing arrangements. |
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January 2000, copyright piracy and trade mark counterfeiting offences were listed under Schedule 1 to the Organized and Serious Crimes Ordinance in order to enable Customs to deploy enhanced investigation and enforcement powers against such offences. |
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April 2001, to combat bootlegging, the Prevention of Copyright Piracy Ordinance was amended to criminalize unauthorized possession of video recording equipment in cinemas, theatres and concert halls used for the showing of films or performances. The Copyright Ordinance was also amended to tackle corporate piracy to the effect that anyone who knowingly possesses infringing copies of computer programs, movies, television dramas, or musical recordings in business will commit a criminal offence. |
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November 2003, copyright restriction over parallel importation of computer software products was removed through the Copyright (Amendment) Ordinance 2003. |
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With the Copyright (Amendment) Ordinance 2004 coming into operation on 1 September 2004, it is an offence for a person to possess, for the purpose of or in the course of a profit-making copying service business, an infringing copy of a copyright work as published in a book, magazine or periodical. The newly enacted offence aims to strengthen criminal sanctions against illicit reproduction of printed works. |
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January 2003, to enhance trade mark search, the Hong Kong Trade Marks Registry launched the on-line trade mark search system. The new facility allows anyone to search, free of charge, for trade marks applied and registered in Hong Kong on the Internet. Since 2003, the new computer system allows electronic filing of applications for trade mark registration. Similar services will be extended to patents and registered designs in 2004. |
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April 2003, the new Trade Marks Ordinance came into force. The new Ordinance modernizes Hong Kong's trade mark law, simplifies the registration of trade marks, increases the range of signs that can be registered as trade marks and provides increased protection to trade marks. The new law also substantially cut down the fees required for trade mark registration. |
Fact 7 :
HONG KONG'S LABOUR FORCE IS PROTECTED BY LEGISLATION
August 2004
Prepared by :
Trade and Industry Department
The Government of the Hong Kong Special Administrative Region
Trade and Industry Department Tower,
700 Nathan Road,
Kowloon, Hong Kong
Telephone Number :
(852) 2398
5405
Website : www.tid.gov.hk |
