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Hong Kong Economy Revitalized
The Hong Kong market has regained its vitality after the Asian financial crisis in late 1997, said analysts examining this year's financial success.
The new high of HK$74.1 billion (US$9.51 billion) surplus in international balance of payment in 1999 equals 6 per cent of the local gross product.
The unemployment rate adjusted to seasonal factors was 5.1 per cent to the end of May, declining by 0.4 per cent from February to April. The Hang Seng Index rebounded to 16,000 points after it dropped to 6,000 points in 1997, and this year an economic growth rate of 6.8 per cent is predicted after it decreased by 5.7 per cent only one year ago.
It is a contrast to 1998, when the Hong Kong economy nosedived with the international balance of payments at HK$53.8 billion (US$6.9 billion) in the red. Direct investment inflow, mainly composed of reinvestment returns, surged from HK$114.4 billion (US$14.68 billion) in 1998 to HK$179.9 billion (US$23.08 billion) in 1999.
All these signals imply that the Hong Kong economy has recovered from the crisis and is again attracting a massive inflow of foreign funds, said brokers and analysts.
A Hong Kong Special Administrative Region (SAR) Government spokesperson said reserve assets also soared in 1999 in the wake of this surplus and the current account surplus also recorded a pronounced increase.
Statistics released by the SAR Government show that the first quarter gross domestic product surged 14.3 per cent from the same period last year, hitting a record high during the past 14 years.
A survey found that the business confidence index grew from six in the fourth quarter of 1999 to 20 in the first quarter of this year, confirming that the local economy was improving.
But the path for Hong Kong's economic improvement out of the worst recession in a generation is by no means an easy one.
The economic meltdown that came soon after the change of sovereignty gave rise to fears that Hong Kong was losing its unique status as a free and economically prosperous international city, and the newly founded SAR Government was overwhelmed by scepticism and vicious assumption.
Backed by the Chinese mainland and performing in accordance with the principle of "one country, two systems," the SAR enjoys a high autonomy, which has resulted in a "very effective economic policy" in Hong Kong and the "least interventionist" government in Asia, if "not the world," said one of the region's major economic and political consultants, the Political and Economic Risk Consultancy in 1999.
Meanwhile, the SAR Government has fought to resharpen its economic edge.
Three forces are proven to bolster the economic performances of Hong Kong, refurbishing the tarnished image of the international metropolis. They are: thriving information technology, the accelerated reshuffle of traditional industries and a vast co-operation potential between Hong Kong and the mainland.
Hong Kong has in recent years diversified its economy into new areas of growth-innovation and technology, said SAR's Financial Secretary Donald Tsang.
Tsang said the Internet, e-commerce and dotcom revolutions have been the catalyst for local entrepreneurs to seek out new ideas and solutions for the new economy.
Hong Kong signed a formal agreement with Internet group Pacific Century CyberWorks on June 4 to build a US$2 billion high-tech "Cyberport" on the west side of Hong Kong island, which the government hopes will diversify and revitalize the economy.
The waterfront high-tech park will cost HK$15.8 billion (US$2.02 billion) to attract and house information technology companies and their staff, and the Cyberport would be owned by the SAR Government.
The Cyberport and Science Park are designed to consolidate Hong Kong's position as the premier IT and communications hub in Asia, as well as a centre for innovation in technology-based industries, said an official statement.
Under the new foreign trade system, information technology will play a large role in import and export trading. Hong Kong will evolve into a global business integrator, instead of being only a bridge between the mainland and the rest of the world, said Victor Fung, chairman of the Hong Kong Trade Development Council. "The e-commerce transaction volume could reach US$40,000 million by 2003," he added.
About 30 per cent of companies in Hong Kong have founded websites and information technology systems, making a large-scale e-commerce possible. Only 5 per cent of Hong Kong businesses had websites in 1999.
High-tech stocks of new economy factors, including China Telecom and Huschison Whampon, also have become the darlings of the Hong Kong market, seeking to raise huge amounts of money with initial public offering (IPO).
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