hong kong's economic development and transformation kc kwok government economist 29 august 2007
TRANSCRIPT
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Hong Kong's Economic Development and Transformation
KC Kwok
Government Economist
29 August 2007
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Recent economic performance• Rapid economic rebound after SARS
Above-trend GDP growth for the past 15 quarters
6.9
4.11997 - 2006
trend growth
-10
-5
0
5
10
15
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
(y-o-y %)
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HK’s strong economic rebound• Real GDP growth: 7.7% p.a. during 2004-
2006, 6.3% in H1 07
• Unemployment has fallen from a high of 8.6% in 2003 to 4.1%; improvement is across-the-board
• Recovery broadening to more sectors, boosting investor and consumer confidence
• Inflation has remained mild
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Is it the best of times?Or is it the worst of times?
• HK’s macroeconomic performance is the best in the past 20 years
• HK is benefiting from and contributing to China’s modernization
• HK is the most competitive city in China
• HK has lost a decade and many people are still earning less than 10 years ago
• China needed HK in the past; HK needs China today
• HK is expensive and is being overtaken by other Mainland cities
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• A centre of excellence for China
• Rule of law, global connectivity, protection of property rights, good governance, freedom of information and speech
• Will China be managed in a Japanese style? Or will China be much more internationally oriented?
Is HK being marginalised? Or is HK in demand as never before?
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Major highways in Guangdong province
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International Herald Tribune 23 June 2006.
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Container throughput for China ports
21.7
18.5
7.7 7.1 6.6
0.30.90.3 0.5 0.50.71.01.12.5
14.4
17.8
0.51.3
2.01.71.22.6
5.06.3
1.2
6.0
23.5
4.0 3.21.3 1.2
0
5
10
15
20
25
Hon
g K
ong
Sha
ngha
i
She
nzhe
n
Qin
gdao
Nin
gbo
Gua
ngzh
ou
Tia
njin
Xia
men
Dal
ian
Lian
yung
ang
Zho
ngsh
an
TEUs (million)
1997 2001 2006
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Re-exports accounted for 95% of total exports in 2006
0
500
1,000
1,500
2,000
2,500
1971 1976 1981 1986 1991 1996 2001 2006
(HK$ billion)
Re-exports Domestic Exports
From manufacturing to logistics
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Growth driver: Exports to the Mainland
Mainland: destination for about half of Hong Kong's re-exports
US
Others
Mainland
0
20
40
60
80
100
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006
(Share of re-exports %)
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Offshore trade increasingly important
Strong momentum in offshore trade
0
500
1,000
1,500
2,000
2,500
1999 2000 2001 2002 2003 2004 2005
Offshore Trade (Merchanting) Re-exports of goods
(Value of goods involved, HK$ billion)
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Direct contribution of trading and logistics to GDP (%)
Trading Freight, transport and storage services
Land Water Air Total
1997 18.1 0.5 1.6 1.1 3.4
1999 18.3 0.5 1.9 1.2 3.8
2001 20.0 0.5 2.0 1.3 3.9
2003 2005
21.5 23.4
0.5 0.4
2.3 2.4
1.5 1.9
4.5 4.8
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2006/2003(3 year annual growth)
(%)8.9
Wholesale and retail trades 6.7Import and export trade 14.0Restaurants and hotels 12.3Transport and storage 9.6Communications 11.9Financial and insurance 18.2Real estate and business services 2.2Community, social and personal services 1.8
Services
Financial services, trading and logistics led economic growth in recent years
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Premier financing centre for Mainland companies
* As of July 2007
Platform for global investors to invest in Mainland enterprises
0
10
20
30
40
50
1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007*
Red chips H shares
(As % of market cap. on main board)
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High-end services serving headquartersMeeting point of Mainland and overseas enterprises
0
1,000
2,000
3,000
4,000
5,000
6,000
2001 2002 2003 2004 2005
Overseas enterprises (LHS) Mainland enterprises (RHS)
(Total # of regional / local HQs & offices)
0
100
200
300
400
500
600
700
800
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The road ahead
• Continue to integrate itself further into the global economy– Many companies in HK are already global or
regional companies; so are a lot of individuals
– Closer economic collaboration with Mainland
• Go up the value chain– Quality of institutional framework and workforce
– Nurture a creativity-friendly environment
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Thank you