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Hong Kong's continued economic success is thanks to the government's basic policy of minimum intervention and maximum support for businesses. Practices of low taxation, a free and fair market competition, an orthodox legal and financial framework, a fully convertible and secure currency, a highly efficient network of transport and communication, a skilled workforce, the enterprising spirit of locals, a high degree of internationalization, and cultural openness has opened doors to the country's economic growth and stability. The private sector deals with business decisions and is usually left intact by the government. The taxation system is simple, with corporate tax rate at 16.5 percent (in 1996), which is lower than international standards. Although Hong Kong's natural resources are scarce, it is atoned by its deep-water ports and excellent location that welcomes economic ties from all over the world. Not only is the harbor a generator of the country's income, but the airport also has a reputation of being the world's third busiest in the number of passengers. It is also the second busiest in the volume of cargo handled, which is further increasing after the opening of the new airport on Lantau.
Apart from its financial and service industry, manufacturing has also been involved in the country's economy. Entrepreneurs fled from the commercial city of Shanghai to build factories that made textiles, toys, and sundries. Today, a majority of Hong Kong's industry is in electronics, textiles and garments, printing, publishing, machinery, fabricated-metal products, plastic products, watches, and jewelry. It was until the late 1970s that Hong Kong's business sector was an arena for British companies like Jardine Matheson, Wheelock Marden, Hutchison Whampoa, and the Swire Group. Since then, enterprising Chinese groups with investments in shipping, property, and the textile industry have risen to manipulate some of the British-founded concerns. Looking to their mainland Chinese counterparts as the biggest potential market in the world, Hong Kong Chinese have become more competitive than British rivals. Thanks to the economic ties with China that was established in the late 1970s, Hong Kong has seen huge successes in its economy. Both countries have benefited from the association with China dominating Hong Kong's trade in goods at 40 percent of the total trade. China's share in Hong Kong's export of foreign-made goods is higher at about 90 percent, making China both the largest market for and the largest source of Hong Kong's goods for re-exports. In 1996, Hong Kong was China's third largest trading partner after Japan and the United States.
Hong Kong provides financial and business support to China's companies and tourism industries. For the international business and tourist interests that are not familiar with China and its cultures, Hong Kong assists them with promotions by supplying information among other things. In 1996, the Chinese immigration office recorded 29 million trips by Hong Kong Chinese to the mainland and an additional two million visits by foreigners who entered the mainland through Hong Kong.
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Another
of its many reputations is the status of Hong Kong as the world's fifth
largest banking center. The country has constituted itself as a major
international trade and financial center with proper economic fundamentals.
In 1996, Hong Kong's per capita gross domestic product (GDP) was second
to Japan and Singapore in Asia and exceeded that of the United Kingdom,
Canada, and Australia.
Financial
and service-center links between Hong Kong and China have also been increasing.
The Bank of China is now the second largest banking group in Hong Kong,
after the British-based Hongkong Bank. The country holds about 80 of the
world's top 100 banks, making it a well developed international financial
center.