four - Hong Kong and human dignity

Summary

With a population of 6.81 million, Hong Kong is one of the most developed societies as well as the world's freest economy. As a former British colony and now as a special administrative region of China, Hong Kong has had a government that has consistently followed the principles of the free market. David Wilson (1987, p 13), a former colonial governor, claims that Hong Kong was ‘the prime example of a free-trade economy’; while Tung Chee Hwa, the first Chief Executive (CE) of the Hong Kong Special Administrative Region (HKSAR), confirmed that ‘we remain firmly committed to upholding our system of free enterprise and will adhere steadfastly to the philosophy of small government with prudent fiscal management’ (Tung, 2000, p 16). Hong Kong's economic development is associated with its free market policies. The former Financial Secretary of the HKSAR points out: ‘a free market will lead to optimal distribution of resources, promote economic growth and create employment opportunities’ (Leung, 2003, para. 24). Hong Kong has experienced rapid economic growth since the 1970s; its average annual GDP growth rate was 5% between 1989 and 1997 (Abacci Atlas, 2004). The Hong Kong government has imposed several financial restrictions to minimise its role in the market and maximise the freedom of its economy. First, public expenditure is limited to 20% of Hong Kong's GDP. Second, the government aims to maintain a balanced budget. Third, the HKSAR has to accumulate fiscal reserves equal to 12 months’ expenditure. Fourth, a low-rate and simple tax system has long been considered the key to Hong Kong's economic success.

Because of the above fiscal measures, social welfare development in Hong Kong has been restricted. In keeping with free market philosophy, Hong Kong workers have limited labour protection. Hong Kong is one of the few developed economies without a minimum wage. It was not until 2002 that a Mandatory Provident Fund was set up to provide some form of retirement benefits. The scheme ‘has consolidated the foundation of Hong Kong's capitalism by socializing and incorporating the whole working population in the market economy but has provided little protection for their old age’ (C.K. Chan, 2003, p 123).

In recent years, Hong Kong has experienced an economic crisis as a result of the decline of its manufacturing industry, the Asian economic crisis, and the outbreak of the severe acute respiratory syndrome (SARS).