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 2018
The economy of Hong Kong is externally oriented and highly dependent on trade with the rest of the world. Hong Kong economy as measured by Gross Domestic Product (GDP) in real terms recorded a growth of 3.0% in 2018. The value of total merchandise trade amounted to US$1,133 billion (312% of GDP) with imports and exports at US$602 billion (166% of GDP) and US$530 billion (146% of GDP) respectively. In the same year, Hong Kong was the world's 7th largest trading economy in goods - the 8th largest exporter and the 8th largest importer.
The services sector continues to be very important to the Hong Kong economy. It contributed 92% to the GDP in 2017 and accounted for 88% of the total employment in 2018. Hong Kong's trade in services amounted to US$195 billion (54% of GDP) in 2018. In the same year, Hong Kong was the world's 18th largest commercial services trading economy - the 15th largest services exporter and the 19th 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 increased by 8.1% in 2018.
- As Hong Kong's 6th largest supplier, goods imported from the US registered an average annual rate of 1.3% in value since 2014. They accounted for 5% (US$29 billion) of Hong Kong's total imports in 2018.
- Hong Kong was the US' 21st largest trading partner, 10th largest export market, and 42nd largest source of imports in 2018.
- Hong Kong was US' 3rd largest market for wine exports, 4th largest market for beef and beef products and 7th largest market for agricultural products in 2018. Other major exports from the US to Hong Kong in 2018 were electrical machinery, apparatus and appliances, and electrical parts thereof; telecommunications equipment; and non-metallic mineral manufactures.
- In terms of trade in goods, the US has all along been enjoying a substantial trade surplus with Hong Kong. In 2018, the US had a surplus of US$31.1 billion in merchandise trade over Hong Kong, the single economy with which the US has the highest trade surplus.
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. As at the end of December 2018, there were around 20 758 US nationals residing in Hong Kong and 1.3 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 2018, there were 290 regional headquarters, 434 regional offices and 627 local offices in Hong Kong with parent companies located in the US.
- Notable US companies represented in Hong Kong include 3M, Amazon, Apple, AT&T, Bloomberg, Chevron, Cisco, David Zwirner Gallery, Dell Technologies, Deloitte Blockchain Lab, Deloitte Touche Tohmatsu, Dow Chemical, eBay, Estee Lauder, Expedia, ExxonMobil, Facebook, Fedex, First Data, Gap, Gemological Institute of America, General Electric, General Mills, Google, Hewlett-Packard Enterprise, HP Inc., IBM, Johnson & Johnson, Kaplan Education, Kirkland & Ellis LLP, Latham & Watkins, LinkedIn, Marriott International, Microsoft, MIT Hong Kong Innovation Node, New Balance, Nike, Oracle, Pace Gallery, Payoneer, PayPal, Pfizer, Procter & Gamble, Ralph Lauren, Skechers, Stripe, Sysco Corporation, The New York Times, Time Inc., Turner Broadcasting, Under Armour, United Parcel Service, University of Chicago Booth School of Business, VF Corporation, Waggener Edstrom Worldwide, Walt Disney, WeWork and Yahoo!.
- Several states, including Florida and North Carolina have set up representative offices in Hong Kong. In addition, a number of port authorities from US cities and states maintain a presence in Hong Kong.
- The US has made substantial inward direct investment in Hong Kong. As at end-2017, the position of inward direct investment from the US amounted to US$41.7 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 import/export, wholesale and retail trades sector.
- 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-2018, nine out of the 152 licensed banks, and five out of the 18 restricted licence banks and one out of 48 local representative offices in Hong Kong were owned by US interests. The total assets of and customer deposits with US banks were around US$148 billion and US$79 billion respectively, representing around 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, Wells Fargo Bank, Morgan Stanley and Goldman Sachs.
- In the insurance sector, US companies rank 3rd in number among foreign insurers operating in Hong Kong. Of the 161 insurance companies authorised in Hong Kong, 10 are US companies. Another 12 are known to be controlled by US interests.
- US insurers in Hong Kong include members of the American International Group, the Chubb 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 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 77 million visitors.
- 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 American Airlines, Atlas Air, Federal Express, Kalitta Air, National Air Cargo, Polar Air Cargo Worldwide, Sky Lease I, Southern Air, Western Global Airlines, United Air Lines and United Parcel Service.
FACT 3 :
THE US IS AN IMPORTANT EXPORT MARKET FOR HONG KONG
- The US was the 2nd largest market for Hong Kong's total exports, accounting for US$46 billion or 9% of the total value in 2018.
- Hong Kong's major export items to the US in 2018 included electrical machinery, telecommunications and sound recording and reproducing apparatus and equipment, jewellery, and office machines and automatic data processing machines.
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 2018, around 8% (US$37 billion) of Mainland China's exports to the US, and around 6% (US$10 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 of the United States and the Fraser Institute of Canada.
- 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 2018 around 1.4% 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.
FACT 6 :
HONG KONG RESPECTS INTELLECTUAL PROPERTY RIGHTS
- Hong Kong is fully committed to upholding a robust and effective system of intellectual property (IP) protection, which covers patents, trade marks, copyright and registered designs. In this regard, the World Economic Forum has ranked Hong Kong the 9th among 140 economies worldwide in terms of IP protection.
- We update our IP laws from time to time to meet our prevailing social and economic needs. We are, for example, pressing ahead with the establishment of an "original grant patent" system which is scheduled for launch in 2019. We are also preparing for implementation of the Madrid Protocol concerning international registration of marks.
- The Hong Kong Customs has all along been taking rigorous enforcement actions against infringement activities, so as to protect the legitimate interests of IP right owners. C&ED is also committed to enhancing co-operation with IP enforcement authorities in other jurisdictions, including the US, in combating the transnational flow of infringing goods.
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 International Labour Conventions (ILCs) which prescribe internationally recognised standards on various labour matters. As at the end of 2018, Hong Kong has applied 31 ILCs.
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 the economy and trade in the US, and help foster trade and commercial ties between Hong Kong and the US. Their webpages are:
- Washington DC : https://www.hketowashington.gov.hk
- New York : https://www.hketony.gov.hk
- San Francisco : https://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.