As an archipelago of 260 islands, Hong Kong is probably a little different to what many people have in mind as the Far East brings to mind fishing villages and slow pace of life. This former British colony has made itself one of the major economies of the region, often acting as a go-between for the West and Far East, all the while being home to a thriving and diverse community of Expats living in Hong Kong.
The colony was passed to Chinese control in 1997 and under a special agreement with the Chinese as the Hong Kong authorities will have autonomy with regards to their internal affairs until 2047 under a system dubbed as “one country, two systems”. After this period China will be able to take full control of the archipelago, although the Chinese took control of foreign affairs and the defense of the nation as soon as the 1997 agreement was signed. As for changes on the ground, there hasn’t been much as posted in Hong Kong Expat Forum last July 19, 2009:
“HK is like the goose that lays golden eggs for the Communist party. If they make any radical changes, HK would no longer be the international financial center and tourist mecca it is.”
The culture of Hong Kong is very much based around a number of ethnic groups who have all played a major part in the colony at some stage in the past. The most visible influence has to be the British way of life, with politics, law and the capitalist economy is still in use to name but a few. Initially after the handover to China there were many inside of Hong Kong who were concerned about the future, with some fearing a slow decay of Western values in favor of a more traditional Chinese way of life. At this moment there are no signs that this will happen, but this may change as we approach the end of the 50 years of autonomy in 2047.
Hong Kong has a heavily Westernized culture, although there are still many signs of the historic influences of years gone by – statues and architecture are two of the main areas which spring to mind. Many visitors will appreciate the “old and new” scenario which has ensured that there is something for everyone. A visit to the movies or a visit to some of the sacred buildings of history can help to relax after the hustle and bustle of the hectic areas of the country.
While Hong Kong offers an interesting mix of Asian and European immigrants, 95% of the population is of Chinese origin (a strong reason why control has been passed to China). However the country does have a strong contingent of British, Americans,. Australians, Canadians, Japanese and Korean, which are clear indicators attracting business from all areas of the world.
Hong Kong offers one of the purest capitalist economies of the Far East, which has attracted a lot of industry leaders to the area (ranking as the Freest Economy in the world for over a decade). After the Asian crisis of 1998 the economy has recovered of late, and in the final quarter of 2006 posted an increase of some 7%. The economy has just come out of recession, retail sales are pushing ahead strongly, posting a 3.3% growth in the second quarter of 2009.
While the country initially had a manufacturing led economy until the Second World War, the authorities have overseen a major shift into a service economy. The country is very strong in finance and tourism, and a big attraction for immigrants and expats who enjoy the lifestyle, the employment prospects and the income. Unemployment is at a stable 6.8% since the financial recession affected the globe in 2008, which is much lower than what the country undergone during the 1997 financial crisis.
The economy itself is well supported by the authorities who do very little to intervene, offering both Far Eastern and Western companies the chance to trade with very few barriers to entry. The attitude of the authorities together with an advantageous tax regime should ensure that the economy continues to grow in the foreseeable future. As we approach the full hand over to China in 2047, it will be interesting to see the changes that are introduced by the Chinese authorities, should there be any at all.
The property market in Hong Kong has shown a marked recovery since the lows of 1998, and the introduction of China to the equation has opened up the Chinese property market to many who had never considered it before. In general Hong Kong property is very expensive, due partly to the fact that there is very little unused land left in the country, thereby little opportunity for new developments.
Current property year on year prices rises are averaging some 6%, although there are a number of hot spots with Shenzhen rising by 10.7%, Beijing by 9.9% and Guangzhou by 8.6%. This has been curtailed with the worldwide global recession and the year on year prices have dropped in 2008. Hong Kong has been one of the few markets that indicate positive growth in 2009.
As for the projections in 2010, the recovery is now ongoing, but there is still need for a nurturing hand to cool down the sudden influx of property investors. Governments in China, Vietnam and Korea are considering introducing measures to cool the real estate markets after prices started soaring in the last few months. The next few years should see interest in Chinese property increase, and as Hong Kong is in effect part of the China the barriers to entry should be much reduced from the past.
Like most Far Eastern economies, timing is vital when investing in to the property market, although the stock market normally offers a good indication as to the future direction of property prices. This is because an expanding economy is good for business, and the more business which is attracted to Hong Kong, the more demand for property.
While the benefits system in Hong Kong is similar to the British system, it does not have the same burden on the economy. The government of Hong Kong is awash with funding, due in the main to income form the rising property market, although all benefits are tightly means tested.
All residents are entitled to benefits, although the means testing system is a little different to other former British colonies. Hong Kong has historically means tested families rather than individuals – so if a young person is living at home, they will only receive benefits if the family as a whole is under the limit.
The Hong Kong benefits system seems to focus more on the people who really need assistance, and this focus of families in need will only increase as the Chinese influence starts to filter through in future years. Hong Kong authorities are very keen to promote the welfare state as a last resort, rather than a first resort (which is common in places such as the UK).
Hong Kong is most definitely one of the major economies of the Far East, offering a useful stop for Western companies looking to crack the local markets. The advantageous tax system and growing economy have also attracted a vast array of expats looking to fill spaces in the buoyant employment market. Many areas of the country are highly influenced by the likes of the US, while other areas retain a more traditional look, highlighting the mixed Hong Kong culture
There are some stress points though such as what was shared in Hong Kong Expat Forum in 19 July 2009:
“HK people r very money driven, i find it hectic and stressful to live here.”
Another real uncertainty is the plans of the Chinese authorities once the 50 years introductory period is up, and full control reverts to the Chinese government. Quite why they would make too many changes is unclear, as the Honk Kong economy offers a very lucrative income stream for one of the world’s largest countries.
Capital : None (effectively part of China)
Official Language : Chinese / English
Government : Chief Executive (at least until 2047)
Size : 1,104 km2
Population : 6.8 million
Currency : Hong Kong Dollar
International Dialling Code : +8
Economy : 40th largest in the world
Religion : Buddhism (although there is also a large Christian Community)