Hong Kong's Economic Competitiveness

　　Ⅰ. Economic Development

　　Hong Kong is characterized by its high degree of internationalization, business-friendly environment, rule of law, free trade and free flow of information, open and fair competition, well-established and comprehensive financial networks, superb transport and communications infrastructure, sophisticated support services, and well-educated workforce complemented by a pool of efficient and energetic entrepreneurs. Added to these are substantial foreign exchange reserves, a fully convertible and stable currency, and a simple tax system with low tax rates.

　　A Free Economy

　　Hong Kong has for the 12th consecutive year retained its rating as the freest economy in the world in the 2006 Index of Economic Freedom released by The Heritage Foundation. The Cato Institute in the United States, in conjunction with more than 60 economic institutes worldwide, also ranks Hong Kong as the world's freest economy. The International Monetary Fund classifies Hong Kong as an advanced economy. Other highly regarded institutions - like the International Institute of Management Development and the Economist Intelligence Unit - also identify Hong Kong as one of the world's most competitive business environments. Hong Kong was the second best-performing host economy for foreign direct investment (FDI) in Asia, according to the World Investment Report 2005 published by the United Nations Conference on Trade and Development (UNCTAD).

　　Gross Domestic Product (GDP) Growth

　　Over the past two decades, the Hong Kong economy has more than doubled in size, with GDP growing at an average annual rate of 5.3 per cent in real terms. This means Hong Kong has outperformed the growth of the world economy as well as that of the Organization for Economic Cooperation and Development economies. Per capita GDP in Hong Kong has also more than doubled over the same period, with an average annual growth rate of about 4 percent in real terms. In 2005, it reached US$25,622 at current market prices.

　　Ⅱ. Economic Policy

　　Hong Kong has long been well known for its market-led economic policy. "Market-led" means that the government does not seek to direct or plan the course that the economy or the markets should take, as investors and entrepreneurs are deemed to understand the markets far better than officials. Private sector initiatives are a surer way to build Hong Kong's prosperity than the bureaucrat's blueprints. Economic vitality is thus the key to maintaining competitiveness and engendering prosperity for all people in Hong Kong.