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Hong Kong’s Economic Miracle in Historical Perspective Essay


Abstract

Hong Kong is one of the biggest economies in the world. It is ranked number 2 in the list of the best economies in the whole of Asia. It also has the largest international port that handles containers in the entire world. There is an interesting economic development that led to this status.

This paper aims to unlock this economic development that runs back to the pre-colonial period, through the British colonization, to the Chinese administration. The paper is divided into subsections, each addressing a different aspect of the Hong Kong economic growth.

Introduction

Hong Kong is a city that has a rich history, starting from the British colonization through the Japanese occupation, to the current financial giant. Its geographical history is very interesting, with volcanic eruptions changing the initial shape and geological composition of Hong Kong (Shaw et al. 46). The population of Hong Kong has grown steadily due to the immigrants’ settlement. The Japanese invasion had a significant impact on the people of Hong Kong, as more than 2 million Japanese settled in this region unexpectedly.

Its interactions with the People’s Republic of China (PRC) have shaped its culture and contributed significantly to its economic growth. The British colonization was so intense in this region that it only gained administrative freedom in the year 1997. Hong Kong has had defining moments in its economic development, the notable ones being the years 1997 and 2008. The global financial crisis occurred in 2008, leaving a negative impact on the economic growth of this city.

Interestingly, Hong Kong is positioned ahead of Shanghai, which experienced a less impact from the financial crisis of the year 2008. The excellent economic relationship between Hong Kong and Shanghai has contributed to the growth of Hong Kong. Today, Hong Kong has the biggest container handling port. Its economy is one of the largest in the world, while it is ranked number 2 in Asia. This paper will expound on the growth of Hong Kong, from the pre-colonial era to modern-day Hong Kong.

Geography of Hong Kong

The city of Hong Kong is located in the south of China. It borders the Pearl River Mouth Basin (Shaw et al. 43). It has rocks that date back to over 400 million years ago. Hong Kong’s mainland is occupied mainly by igneous types of rock that cover close to 85% of the mainland (43). Other types of rocks that are found in Hong Kong are the volcanic rocks, granitic rocks, and sedimentary rocks, which cover about 50%, 35%, and 15% of the mainland, respectively.

Hong Kong has a unique geological distribution that has been studied from as long as 1862. The first map that gave explicit details on the geological location of Hong Kong was developed by Guppy in the year 1880 (45).

A systematic survey of the territorial geology of Hong Kong was done by geologists from Canada between the years 1923 and 1927. Several geological scaled-maps on Hong Kong have been produced. The first had a scale of 1:84, 480, and was published in 1936. A lot of revisions followed this initially scaled map, with the current one having a scale of 1: 100 000 (46).

The region occupied by Hong Kong has experienced volcanic explosions in selected parts in the past. The explosions resulted in volcanic, as well as plutonic rocks (Shaw et al. 50). It has been revealed that there was a melting of the oceanic crust about 180 million years ago, which resulted in the rocks that formed the geological distribution of the current Hong Kong (50). If the explosions did not occur, then Hong Kong could have been positioned parallel to the Peoples’ Republic of China.

The back-arc is another type of volcanic activity that has shaped the geology of Hong Kong (52). For example, there is a group of volcanic rocks known as Tsuen Wan Volcanic Group. These rocks developed as a result of back-arc volcanic activity and are currently found in the New Territories.

According to Shawn et al. (53), this type of volcanic activity is said to have happened close to 142 million years ago. There are other notable geological periods whose histories have been documented. These eras include the Carboniferous, Permian, Triassic, Cretaceous, Tertiary, and the Quaternary geological periods (Shawn et al. 54).

The Map of Hong Kong and South China
Figure 1: The Map of Hong Kong and South China

History of Hong Kong

Hong Kong has experienced massive transformations in terms of its history, which has been contributed by the interactions with people from foreign countries, such as Britain and Japan (Hung-Kay 13). Initially, Hong Kong was reported as being a collection point for farming, as well as fishing hamlets. Later, it developed to be one of the biggest international ports.

The initial population of Hong Kong before the colonization by the British was minuscule. Hung-Kay notes that the population was only 300,000 in the early 20th century (13). During this time, most of the people in the urban areas of Hong Kong were migrants who came as colonizers, in the case of British, or traders and workers, in the case of the Chinese. The population remained small because many migrants did not consider the possibility of settling in the Hong Kong region.

Their primary motives were work, trade, and power. They were to acquire money and buy pieces of land in their mother countries (Hung-Kay 16). It is argued that the population of Hong Kong in the 1930s was mainly males of Chinese origin within the bracket of the working age. Unfortunately, there was a communication breakdown between different classes that existed in Hong Kong at that time.

The Japanese invasion of Hong Kong in the mid-1940s shaped the demographic pattern of Hong Kong. The displacement of 2 million people who settled in Hong Kong made its population greater by 4-folds (Hung-Kay 17). Current Hong Kong took its demographic shape in the year 1949. Children who were born of immigrants in Hong Kong experienced an eroded culture of their home countries. As a result, the new children from different countries had to adopt a new system of culture that was unique to Hong Kong (19).

The creation of the Independent Commission against Corruption (ICAC) in the 1970s contributed to the historical development of Hong Kong. This commission helped in the shaping of cultural standards that are in use in current Hong Kong. It is interesting to note that, despite agriculture playing a vital role in the economy of countries like China, agriculture in Hong Kong has not contributed to the significant change in the economy of this economic hub.

In 1997, Hong Kong changed from being a British colony to becoming an administrative centre for the People’s Republic of China (PRC). This transformation has had a significant shift in the political scene in Hong Kong. For example, there is still a boundary between Hong Kong and PRC, though efforts have been made to ease transportation and communication between these two regions (Cullinane and Cullinane 279).

The administration governing PRC and Hong Kong adopted the policy of “one country, two systems” after the unification (280). The two systems meant that each region would retain its systems of economics and culture without the interference of the other. Otherwise, there could have been the erosion of values and economies.

Today, the population of Hong Kong has grown exponentially from just 5 million people in the year 2008 to the current 6.7 million people (280). However, the majority of its population are still of Chinese origin. The Hong Kong census of 2002 revealed that the median age of the population in Hong Kong is 37 years; it means that the majority of the Hong Kong population is young men and women.

The four main areas of current Hong Kong are the Hong Kong Island, Kowloon, New Territories, and the Outlying Islands. Kowloon has the highest population, with Outlying Islands having the least population among the four regions (280).

The size and population of the four main areas of Hong Kong
Table 1: The size and population of the four main areas of Hong Kong

Economic Development of Hong Kong

Hong Kong has one of the best economies in the world. Ironically, its economy is ahead of its former colonizer; Britain (Cullinane and Cullinane 282). The average monthly household income in Hong Kong is HK$ 18705, with a median monthly income being HK$ 10, 000.

In addition, Hong Kong is ranked ninth among the biggest trading economies in the world. In Asia, it is ranked second among the best economies. Its stock exchange is one of the best in the world. The port of Hong Kong is dubbed the world’s largest container-handling port. It means that Hong Kong is truly an economically developed region (Allingham par. 5).

One of the major contributing factors to the great economy of Hong Kong is the fact that it has focused more on the service economy than the manufacturing economy. For example, the manufacturing sector accounted for 31.6% of Hong Kong’s GDP in 1980. These figures reduced dramatically to only 5.9% of GDP in the year 2000 (283).

It is recorded that the GDP contributed by the service industry was 85.6% in 2000. Another significant contributing factor to the growth of Hong Kong is the fact that Hong Kong has the busiest container handling port in the whole world because of its strategist position in the east and its massive progress in the sea transportation. The banking system in Hong Kong is vibrant, with its stock market being the second largest in Asia.

Other factors that have contributed to the growth of Hong Kong include the scientific advancement in the region and globally. According to Kinoshita (1090), the progress in science technology started in 1997 when Hong Kong detached itself from the British colonization. Since then, the education system in Hong Kong focused more on research that could bring about significant innovations in the region.

This was contrary to what the British system focused on; the regular theoretical education (1091). The Hong Kong Union of Science and Technology (HKUST) has contributed significantly to the growth of Hong Kong. The Union has funded many projects that have taken part in the growth of Hong Kong. For example, there is a unique Supernet that was introduced by HKUST (1091). This has seen Hong Kong become globally linked by the use of the Internet, resulting in economic growth.

Hong Kong vs Shanghai

The absorption of Hong Kong by Mainland China has had a great impact on the economic development of Hong Kong. This occurred from as early as the 1950s when Hong Kong became a giant in the textile industry. It is interesting to note that Hong Kong has had an impact on the economic growth of Shanghai, as well.

The economic development of Shanghai is less the same as that of Hong Kong. For example, Shanghai replaced Guangzhou as the largest international port in China, which positioned it as the main business hub in Mainland China (Horesh 29). As a result, there was an increase in the amount of tea that was shipped through Shanghai, from 14% in 1846 to 70% in 1853. Between 1890 and 1900, there was a stiff competition among the British, Belgian, German, French, and the American consortia over Shanghai.

It contributed to the fast growth of the city. This contest made Shanghai grow at a faster rate compared to Hong Kong over the same period that the two were under British rule (Horesh 30). Like Hong Kong, Shanghai’s economy has changed from one sector to another. Originally, it was a commercial centre and then moved to a manufacturing city.

Sadly, Shanghai has been viewed as a lesser global economy compared to Hong Kong, despite the fact that Shanghai experienced faster economic growth between the years of 1992 and 2012, compared to Hong Kong in the same period (30).

It is worth noting that Hong Kong and Shanghai have had a cordial economic relationship. This relationship has been fuelled by the fact that both regions have been under the People’s Republic of China’s administration for many years (31). This government has conducted pilot studies in both Hong Kong and Shanghai on the renminbi of trade settlement.

The first pilot study was undertaken in 2008, while another one was done in 2009. These two regions had a united banking system that helped in the establishment of an efficient global system that would ease the use of currency across the border. The movement along the border was enhanced by the improvement in the currency.

There is a profitable relationship between Hong Kong and Shanghai in many other sectors, apart from economics. These ties have an impact on the economic development of both Shanghai and Hong Kong. The ties are in the educational sector and social interactions (31).

It is evident that students from either side seek further education in the other region. Employees from these two areas enjoy the frequent work-exchange programs, as their employers have amicable working relationships. As a result, the workforce in Shanghai and Hong Kong is vibrant and well-informed, thereby contributing to the sound economic development of the two cities (HKTDC Research par. 4).

The global financial crisis of the year 2008 had an adverse impact on the economic growth of both Shanghai and Hong Kong. Shanghai was the least hit by the crisis, with Hong Kong experiencing the worst effect (Horesh 31). The effect was that The US moved massively to Shanghai in an effort to salvage its financial strength. Ironically, Hong Kong was able to salvage itself economically to be ahead of Shanghai, despite the fact that it is Shanghai that was least hit by the crisis.

Conclusion

Hong Kong has experienced massive growth to be in its current financial position. Its geography makes it closer to China; thus, the two share many similarities. Hong Kong has unique rocks that are arranged well due to the volcanic eruptions that occurred millions of years ago. Hong Kong was colonized by the British for many years. As a result, most sectors were headed by the Britons, until 1997, when the People’s Republic of China took over the administration of Hong Kong.

However, the administration policy that was adopted as the “one nation, two systems”, which was arrived at as to allow the different unique cultures and values of each region to be maintained without the worry of being eroded due to the interaction with the other region. Hong Kong and Shanghai have had similar characteristics in their struggles for economic freedom and might.

Shanghai has become China’s strongest commercial city, as a result of its continued effort to remain economically relevant. On the other hand, Hong Kong has grown to become the biggest international container handling port in the world. It is also among the best stock exchange markets in the world, with its economy being the second largest in the whole of Asia.

Works Cited

Allingham, Philip. “.” Victorianweb, 2006. Web.Cullinane, Sharon, and Kevin Cullinane. “Hong Kong City Profile.” Cities 20.4(2003): 279-288. Print.

HKTDC Research. Economic and Trade Information on Hong Kong. 2015. Web.

Horesh, Niv. “Development Trajectories: Hong Kong vs. Shanghai.” Asian-Pacific Economic Literature 27.1(2013): 27-39. Print.

Hung-Kay, Luk. “Hong Kong History and Culture.” Chinese Sociological Review 30.3 (1998): 13-24. Print.

Kinoshita, June. “Hong Kong’s Pre-1997 Science Boom.” American Association for the Advancement of Science 272. 5265 (1996): 1090-1091. Print.

Shaw, Ralph, Kam Tang, Richard Owen, and Joyce Sewell. “The Geological History of Hong Kong.” Geodiversity and Geoconservation in Hong Kong 27.1-2 (2010): 43-57. Print.

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IvyPanda. (2020, May 5). Hong Kong's Economic Miracle in Historical Perspective. Retrieved from https://ivypanda.com/essays/hong-kongs-economic-miracle-in-historical-perspective/

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