Issue for debate

Hong Kong has been one of the most dynamic economies in the last 60 years. The territory experience
rapid growth while under British rule due in large part to the policy of positive non-interventionism
promoting a free market system with minimal government intervention. Hong Kong is now one of the
largest financial services and trading/logistics centers in the world, with strong tourism and professional
services industries making up their four pillars of economic growth. Hong Kong experienced an average
GDP growth of 5% from 1981 to 2015 (nationalinterest.org) which is a testament to its strong legal
system and free market policies. Known as "Asia's World City" and the "Pearl of the Orient" (Wikipedia),
Hong Kong is ranked as having the freest economy in the world for 23 years in a row. (Heritage
Foundation-updated)

Despite impressive historical growth, Hong Kong has struggled recently. GDP growth over the last few
years has slowed to about 2% annually, the lowest of the four Asian Tigers (HK, Singapore, South Korea,
Taiwan). Though recent estimates for 2017 show slight improvement, concerns linger. Over the last 20
years since the handover to China, Hong Kong has become more dependent on China for exports while
also committing over 50% of FDI in 2016 to projects in the Chinese mainland, many of which have
struggled. (HKTDC.com) Meanwhile, the Chinese mainland has increasingly become a competitor for
financial services.

Despite challenges, it is essential Hong Kong maintain its free market policies and limited interventionist
approach. As competition increases in areas where Hong Kong once held advantages, the government
may be inclined to introduce protectionist policies but this would likely erode growth rates further.

Hong Kong should limit government investment to attracting new industries as opposed to a proactive
policy that regulates competition or injures innovation. These latter actions further strain existing
business while making new investment less attractive. Instead of resorting to protectionist controls,
Hong Kong needs to attract new investors and new industries by continually focusing on the market
design aspects that made Hong Kong attractive over the last half-century.

The government of Hong Kong should maintain the economic environment that led to their historical
success with minimal regulatory involvement. This will be challenging enough given the influences of
mainland China, but Hong Kong needs to avoid the active and intrusive economic policies of Beijing and
sustain its economic character by extending their positive non-interventionist approach to include a
focus on attracting new industries and opportunities. Continually investing in new technology, higher
education and infrastructure will provide the basic foundational resources businesses require. In turn,
new industries will reduce the reliance Hong Kong has on their traditional pillars of growth and provide
the revenues necessary to make similar investments in the future.