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Diplomacy in Action

Hong Kong (12/03)


For the most current version of this Note, see Background Notes A-Z.


Hong Kong Special Administrative Region

Area: 1,100 sq. km.; Hong Kong comprises Hong Kong Island, Kowloon, the New Territories, and numerous small islands.
Terrain: Hilly to mountainous, with steep slopes and natural harbor.
Climate: Tropical monsoon. Cool and humid in winter, hot and rainy from spring through summer, warm and sunny in fall.

Population (mid-2002): 6.787 million.
Population growth rate (mid-2002): 0.9%.
Ethnic groups: Chinese 95%; other 5%.
Religions: About 43% participate in some form of religious practice.
Christian, about 8%.
Languages: Cantonese (a dialect of Chinese) and English are official. Education: Literacy--92% (95% male, 88% female).
Health (2001): Infant mortality rate--2.6/1,000. Life expectancy--81.5 yrs. (overall); 78.4 yrs. males, 84.6 yrs. females. Work force (2002): 3.51 million. Wholesale, retail, and import/export trades and restaurants and hotels--44.3%; finance, insurance, real estate, and business services--18.9%; manufacturing--8.8%.

Type: Special Administrative Region (SAR) of China, with its own constitution (the Basic Law).
Branches: Executive--Administration, Executive Council, serving in an advisory role for the Chief Executive. Legislative--Legislative Council elected in September 2000. Judicial--Court of Final Appeal is highest court, other lower courts.
Subdivisions: Hong Kong, Kowloon, New Territories.
Suffrage: Permanent residents, at 18 years or over, living in Hong Kong for the past 7 years are eligible to vote.

Economy (2002)
GDP (2002): $163 billion.
GDP real growth rate (2002): 2.3%.
Per capita GDP (2002): $24,011.
Natural resources: Outstanding deepwater harbor.
Industry: Types--textiles, clothing, electronics, plastics, toys, watches, clocks.
Trade: Exports--$190 billion: clothing, electronics, textiles, watches and clocks, office machinery. Imports--$201 billion: consumer goods, raw materials and semi-manufactures, capital goods, foodstuffs, fuels.

Hong Kong's population has increased steadily over the past decade, reaching about 6.8 million by 2002. Hong Kong is one of the most densely populated areas in the world, with an overall density of some 6,250 people per square kilometer. Cantonese, the official Chinese language in Hong Kong, is spoken by most of the population. English, also an official language, is widely understood. It is spoken by more than one-third of the population. Every major religion is practiced freely in Hong Kong. All children are required by law to be in full-time education between the ages of 6 and 15. Preschool education for most children begins at age 3. Primary school begins normally at the age of 6 and lasts for 6 years. At about age 12, children progress to a 3-year course of junior secondary education. Most stay on for a 2-year senior secondary course, while others join full-time vocational training. More than 90% of children complete upper secondary education or equivalent vocational education.

According to archaeological studies initiated in the 1920s, human activity on Hong Kong dates back over five millennia. Excavated neolithic artifacts suggest an influence from northern Chinese stone-age cultures. The territory was settled by Han Chinese during the seventh century, A.D., evidenced by the discovery of an ancient tomb at Lei Cheung Uk in Kowloon. The first major migration from northern China to Hong Kong occurred during the Sung Dynasty (960-1279). The British East India Company made the first successful sea venture to China in 1699, and Hong Kong's trade with British merchants developed rapidly soon after. After the Chinese defeat in the First Opium War (1839-42), Hong Kong was ceded to Britain in 1842 under the Treaty of Nanking. Britain was granted a perpetual lease on the Kowloon Peninsula under the 1860 Convention of Beijing, which formally ended hostilities in the Second Opium War (1856-58). The United Kingdom, concerned that Hong Kong could not be defended unless surrounding areas also were under British control, executed a 99-year lease of the New Territories in 1898, significantly expanding the size of the Hong Kong colony.

In the late 19th century and early 20th centuries, Hong Kong developed as a warehousing and distribution center for U.K. trade with southern China. After the end of World War II and the communist takeover of Mainland China in 1949, hundreds of thousands of people fled from China to Hong Kong. Hong Kong became an economic success and a manufacturing, commercial, finance, and tourism center. High life expectancy, literacy, per capita income, and other socioeconomic measures attest to Hong Kong's achievements over the last five decades.

The Hong Kong Special Administrative Region (SAR) is headed by Chief Executive Tung Chee Hwa. Mr. Tung began his second 5-year term on July 1, 2002, after his nomination by a selection committee established by the Basic Law. His selection was approved by China's State Council. The selection committee is made up of 800 Hong Kong residents from four constituency groups: commercial, industrial, and financial interests; professionals; labor, social services, and religious interests; and the legislature, the Chinese People's Political Consultative Conference, and the P.R.C. National People's Congress. Legislative Council elections were held in September 2000. According to the Basic Law, Hong Kong's constitution, the Legislative Council has 30 members elected by functional or occupational constituencies, 24 directly elected members, and 6 elected by an election committee. In 2004, this will change to 30 functional members and 30 directly elected members.

The 2000 elections were seen as free, open, and widely contested, although there was criticism that the functional constituency and election committee elections were undemocratic because so few voters were eligible to vote. In July 2002, the Hong Kong Government implemented the Principal Officials Accountability System, which was designed to make the government more responsive to public concerns, and added a layer of 11 political appointees, directly responsible to the Chief Executive, to run the 11 policy bureaus. Three other senior civil service positions--the Chief Secretary, Financial Secretary, and Justice Secretary--also were converted to political appointments, although without a change in personnel.

Principal Government Officials
Chief Executive--Tung Chee Hwa
Chief Secretary for Administration--Donald Tsang
Financial Secretary--Henry Tang
Secretary for Justice--Elsie Leung
Secretary for Security--Ambrose Lee
Secretary for Commerce, Industry and Technology--John Tsang
Secretary for Housing, Planning and Lands--Michael Suen
Secretary for Education and Manpower--Arthur Li
Secretary for Health, Welfare and Food--Yeoh Eng-kiong
Secretary for the Civil Service--Joseph Wong
Secretary for Home Affairs--Patrick Ho
Secretary for Economic Development and Labor--Stephen Ip
Secretary for the Environment, Transport and Works--Sarah Liao
Secretary for Financial Services and the Treasury--Frederick Ma
Secretary for Constitutional Affairs--Stephen Lam

On July 1, 1997, China resumed the exercise of sovereignty over Hong Kong, ending more than 150 years of British colonial rule. Hong Kong is a Special Administrative Region of the People's Republic of China with a high degree of autonomy in all matters except foreign and defense affairs. According to the Sino-British Joint Declaration (1984) and the Basic Law for 50 years after reversion Hong Kong will retain its political, economic, and judicial systems and unique way of life and will continue to participate in international agreements and organizations under the name, "Hong Kong, China." Hong Kong remains a free and open society where human rights are respected. The courts remain independent, and there is well-established and longstanding respect for the rule of law.

Hong Kong is one of the world's most open and dynamic economies. Per capita GDP puts Hong Kong in the ranks of developed countries. The economy grew only 0.6% in 2001 because of the world economic downturn, the September 11 events, and sluggish domestic demand. Economic performance improved gradually in 2002, with real GDP expanding by 2.3% year-on-year. Strong external demand was responsible for the pick-up. However, domestic consumption and investment remained subdued due to near record unemployment and uncertainty about the future. Hong Kong has experienced deflation since November 1998. Falling housing prices due to slack property market conditions are a primary contributor to declining prices. The Hong Kong Government has generally resisted pressure for largescale public expenditures to stimulate the economy. One of Hong Kong's major public policy issues is a growing government budget deficit. The shortfall for fiscal year 2002-03 is estimated at $9 billion, which is 5.5% of GDP, due both to declining revenue and rising expenditure.

Hong Kong enjoys a number of economic strengths, including accumulated public and private wealth from decades of unprecedented growth, a sound banking system, virtually no public debt, a strong legal system, and an able and rigorously enforced anti-corruption regime. The need for economic restructuring poses difficult challenges and choices for the government. Hong Kong is endeavoring to improve its attractiveness as a commercial and trading center, especially after China's entry into the WTO, and continues to refine its financial architecture. The government is deepening its economic interaction with the Pearl River Delta in an effort to maintain Hong Kong's position as a gateway to China. U.S. companies have a generally favorable view of Hong Kong's business environment, including its legal system and the free flow of information, low taxation, and infrastructure. The American Chamber of Commerce's annual business confidence survey, released in November 2002, showed 42% of respondents had a "good" or "satisfactory" outlook for 2003. Survey results showed a positive economic outlook through 2005.

On the international front, Hong Kong is a separate and active member of the World Trade Organization (WTO) and the Asia Pacific Economic Cooperation (APEC) forum, where it is an articulate and effective champion of free markets and the reduction of trade barriers. Hong Kong residents across the political spectrum supported China's accession to the WTO, believing this would open new opportunities on the Mainland for local firms and stabilize relations between Hong Kong's two most important trade and investment partners, the United States and China.

Hong Kong's foreign relations and defense are the responsibility of China. Hong Kong has autonomy in economic and commercial relations.

U.S. policy toward Hong Kong, grounded in a determination to promote Hong Kong's prosperity, autonomy, and way of life, is stated in the Hong Kong Policy Act of 1992. The United States maintains substantial economic and political interests in Hong Kong. The United States supports Hong Kong's autonomy by concluding and implementing bilateral agreements; promoting trade and investment; arranging high-level visits; broadening law enforcement cooperation; bolstering educational, academic, and cultural links; and supporting the large community of U.S. citizens and visitors.

Hong Kong is an active member of the global coalition against terrorism. Hong Kong has joined the Container Security Initiative and remains an important partner with regard to eliminating funding for terrorist networks and combating money laundering. Hong Kong has passed, or has under consideration, legislation designed to bring Hong Kong into compliance with applicable UN anti-terror resolutions and Financial Action Task Force recommendations.

The United States has substantial economic and social ties with Hong Kong. There are some 1,100 U.S. firms, including more than 430 regional operations, and about 50,000 American residents in Hong Kong. According to U.S. Government statistics, U.S. exports to Hong Kong totaled $12.6 billion in 2002, and two-way trade totaled $21.9 billion. U.S. direct investment in Hong Kong at the end of 2001 totaled about $29.4 billion, making the United States one of Hong Kong's largest investors, along with China, Japan, and the Netherlands.

The United States and Hong Kong signed a new civil aviation agreement in October 2002 which significantly liberalized the aviation market. Hong Kong enjoys a high degree of autonomy as a separate customs territory, with no changes in borders, staffing, or technology export controls since the 1997 handover. Intellectual property rights protection has improved substantially in recent years. Introduction of effective new legislation to control illicit production and improved enforcement has now made Hong Kong a regional model of effective IPR protection. The Office of the U.S. Trade Representative and other U.S. agencies now regularly cite Hong Kong as an example for others.

The Hong Kong Government maintains three Economic and Trade Offices in the United States. Addresses, telephone numbers, and web sites for these offices are listed below:

1520 - 18th Street NW
Washington, DC 20036
Tel: (202) 331-8947
Fax: (202) 331-8958
Web Site:

115 East 54th Street
New York, NY 10022
Tel: (212) 752-3320
Fax: (212) 752-3395
Web Site:

130 Montgomery Street
San Francisco, CA 94104
Tel: (415) 835-9300
Fax: (415) 421-0646
Web Site:

Principal U.S. Officials
Consul General--James Keith
Deputy Principal Officer--Kenneth Jarrett

The U.S. Consulate General is located at 26 Garden Road, Hong Kong. Tel: (852) 2523-9011 (general). Fax: (852) 2845-1598 (general): (852) 2147-5790 (consular); (852) 2845-9800 (commercial).

The following sites are not U.S. Government web sites
Hong Kong homepage
Hong Kong Tourism Board
Hong Kong Trade Development Council

For more information regarding visa requirements for Hong Kong, go to Hong Kong immigration.

For the most current version of this Note, see Background Notes A-Z.

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