Economy of Hong Kong
As one of the world's leading international financial centres, Hong Kong's service-oriented economy is characterized by its low taxation, almost free port trade and well established international financial market. Its currency, called the Hong Kong dollar, is legally issued by three major international commercial banks, and pegged to the US Dollar. Interest rates are determined by the individual banks in Hong Kong to ensure it is fully market-driven. There is no officially recognised central banking system, although Hong Kong Monetary Authority functions as a financial regulatory authority. When destabilising factors are hitting the financial market of Hong Kong, they will be monitored and inspected by the Hong Kong Monetary Authority, the financial regulatory agency in Hong Kong. Electronic finance trading is evolutionarily impacting the financial market of Hong Kong.
According to Index of Economic Freedom, Hong Kong has had the highest degree of economic freedom in the world since the inception of the Index in 1995. Its economy is governed under positive non-interventionism, and is highly dependent on international trade and finance. In 2009, Hong Kong's real economic growth fell by 2.8% as a result of the global financial turmoil.
Hong Kong's economic strengths include a sound banking system, virtually no public debt, a strong legal system, ample foreign exchange reserves, rigorous anti-corruption measures and close ties with the mainland China. Despite the downturn, these strengths enable it to quickly respond to changing circumstances. It has the most efficient and a corruption-free application procedure, the lowest income tax, the lowest corporate tax as well as an abundant and sustainable government finance. The government of Hong Kong consistently upheld the policy of encouraging and supporting activities of private businesses.
By the late 20th century, Hong Kong was the seventh largest port in the world and second only to New York and Rotterdam in terms of container throughput. Hong Kong is a full Member of World Trade Organization. The Kwai Chung container complex was the largest in Asia; while Hong Kong shipping owners were second only to those of Greece in terms of total tonnage holdings in the world. The Hong Kong Stock Exchange is thesixth largest in the world, with a market capitalisation of about US$3.32 trillion.
The Hong Kong Stock Exchange is the sixth largest in the world, with a market capitalisation of about US$2.97 trillion. In 2006, the value of initial public offerings (IPO) conducted in Hong Kong was second highest in the world after London. In 2009, Hong Kong raised 22 percent of IPO capital, becoming the largest centre of IPOs in the world. The rival stock exchange of the future is expected to be the Shanghai Stock Exchange. As of 2006, Hong Kong Exchanges and Clearing (HKEX) has an average daily turnover of 33.4 billion dollars, which is 12 times that of Shanghai.
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