Occupied by the UK in 1841, Hong Kong was formally ceded by China the following year; various adjacent lands were added later in the 19th century. Pursuant to an agreement signed by China and the UK on 19 December 1984, Hong Kong became the Hong Kong Special Administrative Region (SAR) of China on 1 July 1997. In this agreement, China has promised that, under its "one country, two systems" formula, China's socialist economic system will not be imposed on Hong Kong and that Hong Kong will enjoy a high degree of autonomy in all matters except foreign and defense affairs for the next 50 years.

Hong Kong has a free market, entrepot economy, highly dependent on international trade. Natural resources are limited, and food and raw materials must be imported. Gross imports and exports (i.e., including reexports to and from third countries) each exceed GDP in dollar value. Even before Hong Kong reverted to Chinese administration on 1 July 1997, it had extensive trade and investment ties with China. Hong Kong has been further integrating its economy with China because China's growing openness to the world economy has made manufacturing in China much more cost effective. Hong Kong's reexport business to and from China is a major driver of growth. Per capita GDP is comparable to that of the four big economies of Western Europe. GDP growth averaged a strong 5% from 1989 to 2005, but Hong Kong suffered two recessions in the past eight years because of the Asian financial crisis in 1997-1998 and the global downturn in 2001-2002. Although the Severe Acute Respiratory Syndrome (SARS) outbreak in 2003 also battered Hong Kong's economy, a solid rise in exports, a boom in tourism from the mainland because of China's easing of travel restrictions, and a return of consumer confidence resulted in the resumption of strong growth from late 2003 through 2005.

GDP (purchasing power parity):$258.1 billion (2005 est.)

GDP (official exchange rate):$179.4 billion (2005 est.)

GDP - real growth rate:6.9% (2005 est.)

GDP - per capita (PPP):$37,400 (2005 est.)

GDP - composition by sector:
agriculture: 0.1%
industry: 10%
services: 89.9% (2005 est.)

Labor force:3.61 million (October 2005)

Labor force - by occupation:
manufacturing 7.5%, construction 2.9%, wholesale and retail trade, restaurants, and hotels 43.9%, financing, insurance, and real estate 19.6%, transport and communications 7.1%, community and social services 18.8% note: above data exclude public sector (2005 est.)

Unemployment rate:5.8% (December 2005)

Population below poverty line: NA%

Household income or consumption by percentage share:
lowest 10%: NA%
highest 10%: NA%

Distribution of family income - Gini index:43.4 (1996)

Inflation rate (consumer prices):1.2% (2005 est.)

Investment (gross fixed):21.2% of GDP (2005 est.)

Budget:
revenues: $31.31 billion
expenditures: $32.3 billion; including capital expenditures of $5.9 billion (2005 est.)

Public debt:1.8% of GDP (2005 est.)

Agriculture - products:fresh vegetables; poultry, pork; fish

Industries:
textiles, clothing, tourism, banking, shipping, electronics, plastics, toys, watches, clocks

Industrial production growth rate:1% (2005 est.)

Electricity - production:37.3 billion kWh (2004)

Electricity - consumption:39.22 billion kWh (2004)

Electricity - exports:3.086 billion kWh (2004)

Electricity - imports:9.84 billion kWh (2004)

Oil - production:0 bbl/day (2003 est.)

Oil - consumption:293,000 bbl/day (2004 est.)

Oil - exports:NA bbl/day

Oil - imports:NA bbl/day

Natural gas - production:NA cu m

Natural gas - consumption:692.2 million cu m (2003 est.)

Natural gas - exports:0 cu m (2004 est.)

Natural gas - imports:71.15 million cu m (2004 est.)

Current account balance:$23.85 billion (2005 est.)

Exports:$286.3 billion f.o.b., including reexports (2005 est.)

Exports - commodities:
electrical machinery and appliances, textiles, apparel, footwear, watches and clocks, toys, plastics, precious stones, printed material

Exports - partners:China 44%, US 16.9%, Japan 5.3% (2004)

Imports:$291.6 billion (2005 est.)

Imports - commodities:
raw materials and semi-manufactures, consumer goods, capital goods, foodstuffs, fuel (most is re-exported)

Imports - partners:
China 43.5%, Japan 12.1%, Taiwan 7.3%, US 5.3%, Singapore 5.3%, South Korea 4.8% (2004)

Reserves of foreign exchange and gold:$122.3 billion (2005 est.)

Debt - external:$416.5 billion (30 June 2005 est.)

Currency (code):Hong Kong dollar (HKD)

Exchange rates:
Hong Kong dollars per US dollar - 7.7773 (2005), 7.788 (2004), 7.7868 (2003), 7.7989 (2002), 7.7988 (2001)

Fiscal year:1 April - 31 March