In our second installment on Hong Kong we look at their domestic trade.
The economy of Hong Kong is a highly developed free-market economy. It is characterized by low taxation, almost free port trade, and a well-established international financial market. The currency, called the Hong Kong dollar, is legally issued by three major international commercial banks and is pegged to the US dollar.In terms of sectors, the economy is dominated by services, which account for 93.7% of the GDP. Industry contributes 6.2%, and agriculture just 0.1%. The main industries are financing and insurance, import and export trade, professional and business services.
Retail Sector: Hong Kong has a thriving retail sector with a wide range of shopping options, from luxury boutiques to street markets. Local residents and tourists contribute significantly to domestic retail sales. Key shopping districts include Causeway Bay, Mong Kok, and Tsim Sha Tsui.
Wholesale Trade: The wholesale trade sector in Hong Kong serves as a regional distribution hub for a variety of goods, including electronics, clothing, and consumer products. Many businesses in mainland China and other Asian countries source their products from Hong Kong wholesalers.
Logistics and Transportation: Hong Kong's strategic location as a transportation and logistics hub in Asia is a key driver of its domestic trade. The Hong Kong International Airport and the Port of Hong Kong are among the busiest and most advanced in the world, facilitating the movement of goods within the region.
Hong Kong International Airport (IATA: HKG, ICAO: VHHH) is the main airport serving Hong Kong. It is located on the island of Chek Lap Kok in western Hong Kong, China. The airport is also referred to as Chek Lap Kok International Airport or Chek Lap Kok Airport, to distinguish it from its predecessor, the former Kai Tak Airport.
Opened in 1998, the airport is the world's busiest cargo gateway and one of the world's busiest passenger airports. It is also home to one of the world's largest passenger terminal buildings, which was the largest when the airport opened.The airport has three runways.
The airport is operated by Airport Authority Hong Kong (AAHK), a statutory body of the Hong Kong government established on 1 December 1995. It runs 24 hours a day and is the primary hub for Cathay Pacific, Greater Bay Airlines, Hong Kong Airlines, HK Express and Air Hong Kong (cargo carrier).
Hong Kong has a major deepwater seaport known as the Port of Hong Kong. It is one of the busiest ports in the world, in terms of shipping movements, cargo handled, and passengers carried. The port has nine container terminals with a total handling capacity of over 18 million twenty-foot equivalent units (TEU). These terminals occupy 2.17 square kilometers of land, providing 18 berths and 6,592 meters deep water frontage.
Food and Beverage Industry: Hong Kong has a diverse and vibrant food and beverage industry. Local restaurants, eateries, and street food stalls contribute to domestic consumption. Additionally, Hong Kong imports a substantial amount of food products to meet its domestic demand.
Real Estate and Construction: The real estate and construction sectors play a vital role in Hong Kong's domestic trade, with continuous development of residential, commercial, and infrastructure projects. These sectors are closely linked to property investment and development.
Financial Services: Although not typically considered part of domestic trade, Hong Kong's financial services sector is integral to its economy. It provides a wide range of financial products and services to local businesses and residents.
Tourism: While the COVID-19 pandemic has significantly impacted tourism, it remains an essential component of Hong Kong's domestic economy. The hospitality, entertainment, and tourism-related sectors rely on domestic spending and international visitors.
Technology and Innovation: Hong Kong has been increasingly focusing on technology and innovation as a driver of domestic trade. The government and various organizations are promoting startups and tech-related industries.
As for the GDP, it was estimated to be $382.854 billion (nominal) and $544.735 billion (PPP) in 2023. The GDP per capita was estimated to be $52,429 (nominal) and $74,598 (PPP) in 2023.
The unemployment rate was 4.3% in 2022, and the labour force was 3,946,772 in 2019. The labour force is distributed among various occupations: manufacturing (6.5%), construction (2.1%), wholesale and retail trade, restaurants, and hotels (43.3%), financing, insurance, real estate, professional and business service (20.7%), transport and communications (7.8%), community, social, and personal services (19.5%).
In terms of trade, Hong Kong exported $537.6 billion worth of goods in 2022. The main export partners are Mainland China (56.7%), United States (6.6%), India (3.8%), Taiwan (3.4%), Vietnam (2.5%), Japan (2.3%), United Arab Emirates (2.1%), Singapore (1.8%), South Korea (1.8%)¹. Imports amounted to $629.2 billion in 2022, with the main import partners being Mainland China (42.2%), Taiwan (11.9%), Singapore (8.1%), South Korea (5.9%), Japan (4.9%), United States (4.3%), Malaysia (3.6%), Vietnam (2.9%).
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