Historically under Chinese rule, Hong Kong was taken over by the British in 1841, when military forces invaded the country after the ruling Qing Dynasty’s refusal to allow opium to be imported into Hong Kong. Slowly but surely the British way of life was introduced to the country, which very quickly became one of the main industrial nations of the Far East.
After years of negotiation and conflict, 1997 saw the signing of an agreement between the UK government and Chinese authorities to transfer sovereignty back to China. Under a complicated “one country, two tier” system, Hong Kong will retain its own laws, police force and monetary system until at least 2047, although China will be responsible for defending the colony and foreign affairs.
While many observers had expressed grave concerns about the hand over, and the conflicts between Chinese society and the Hong Kong society, there have been no problems as yet. Whether this will change in the run up to 2047 remains to be seen. Currently, Hong Kong is a Special Administrative Region of the People’s Republic of China. It is now one of the most cosmopolitan areas in Asia, as the country has become the hegemony of the East and West in Asia.
Contents: Economy in Hong Kong | Prospects in Hong Kong | Hong Kong Facts
Economy in Hong Kong
Hong Kong is viewed by many as the gem of the Far East offering the purest form of a capitalist economy in the region. A free market, low taxation and non governmental intervention have seen the economy mushroom over the last 100 years. It now boasts the largest number of corporate head offices in the Asia region, and has the most foreign embassies at 114. Hong Kong is known as one of the Four Asian Tiger economies as it has high growth rates and rapid industrialization over a short period of time.
While the Hong Kong economy is massively affected by the mood of the Far East region, it has suffered a number of downturns most notably a 5.8% fall in the economy during the 1998 Far Eastern crisis. Even though this episode was short lived, it does highlight the magnified effect on what is in reality the only Western style economy in the region. On the positive side, Hong Kong does attract the best professionals in a variety of areas of business including construction, finance and hospitality to name but a few.
While general income tax levels are much lower than places such as the UK, Hong Kong does have a specific property tax, which was introduced to ward off the threat of speculators becoming heavily involved in what is a very buoyant property market. The country has experienced a substantial change from a manufacturing led economy to a service based economy in order to compete on a worldwide basis. This has proved highly successful, although due to the lack of arable land the country has historically imported all food and agricultural requirements. For many western companies, Hong Kong is their route of choice into the Asian market, where western style laws, cultures and practices are very strong. While 2047 is some way off, it will be interesting to see how the make-up and performance of the economy are affected.
Prospects in Hong Kong
Even though the long term prospects of Hong Kong are shrouded in some confusion, due to the 2047 deadline, the economy has not suffered as yet. While there were a small number of company withdrawals from the area when the hand over was completed, they were not significant. There will most probably be some changes after the 50 year hand over period has ended, although it does seem unlikely that the Chinese authorities will make wholesale changes to such a lucrative province of the country.
Much like Japan, the Hong Kong work force is very quick to embrace technology which has seen the growth of a major market for western workers. Finance and other similar industries are very prominent in the area, which is reflected in worldwide interest in the Hong Kong stock market. If looking to settle and become an Expat in Hong Kong you will need to research the property market which can be very volatile, as well as very expensive!
This expensive cost of living is reflected in a post at the Hong Kong Expat Forum last June 1, 2008:
I absolutely love life in HK, and have no plans to ever return to UK/Europe. The pluses are that you are in a constantly fascinating Asian city, a truly world city which never ceases to surprise, amaze and entertain. You have everything that Europe offers (food, culture, shopping, reliable infrastructure, high salaries etc) with the best of Asia (exotic, different, polite people, safety etc etc). The territory is varied - from the amazing urban areas of Central & Kowloon, to the beautiful countryside of The New Territories within 30 mins on public transport.
What are the downsides ? Well, these are minor in comparison to the benefits. However, housing in the central area is expensive, my apartment is small - but then there's only me living here & I do live in the city centre. The air pollution can get pretty bad, but I've got used to it.
I'd say make the move, you'll never regret it, and neither do the many expats who live here !
Key Facts of Hong Kong:
Bordered by China
Food: Chinese, Japanese, European and American
Temperature: 14c to 31c
Industries: Finance and hospitality
Education: Very high standard, with distinctly western influences
Health: Life expectancy 81 years