August 1997

1997 International Monetary Fund

Order Information

O C C A S I O N A L   P A P E R     
Hong Kong, China
Growth, Structural Change, and
Economic Stability During the Transition

John Dodsworth and Dubravko Mihaljek

Glossary of Abbreviations
I Introduction and Overview
Longer-Term Trends
Adjustment in the Mid-1990s
Macroeconomic Policies
Transition and Future Prospects
II Growth, Structural Change, and Economic Integration
Structural Transformation
Economic Integration of Hong Kong and China
Patterns of Growth
Fluctuations in Aggregate Output
III Adjustment in the Mid-1990s
Why Adjustment Was Needed
Consolidation in Asset Markets
Adjustment in Product and Factor Markets
External Sector and the Real Exchange Rate
IV Macroeconomic Policy Framework
Fiscal Policy
Linked Exchange Rate System
Financial System and Regulatory Framework
Factor Markets and Social Policies
Trade and Competition Policies
V Competitiveness in Services and Manufacturing
Services Industries
Profitability and Intersectoral Resource Allocation
Differential Productivity Growth, Inflation, and the Real Exchange Rate
Policy Implications
VI Transition in 1997
Historical Context
Hong Kong’s Constitutional Arrangements
Institutions of Government
Framework for Economic Policymaking
I Estimates
Consumption Function Estimates
Estimates of Export Supply and Import Demand Functions
II Data Sources and Description
Data Sources
Description of the Data
Estimates of Real Growth in Manufacturing
III Joint Declaration and the Basic Law

  1. Basic Indicators
  2. Business Cycles in Hong Kong
  3. Hong Kong: Interactions with Business Cycles in China and the United States
  1. Discrepancy Between Actual, Preliminary, and Projected Budgetary Outcomes
  2. Consolidated Government Account
  3. Medium-Range Fiscal Forecast
  4. Financial Indicators, Pre- And Post-Accounting Arrangements
  1. Basic Indicators for Manufacturing
  2. Real Output and Deflators in Trade and Tourism
  3. Productivity and Unit Labor Costs in Trade and Tourism
  4. Real Output and Deflators in Transportation, Storage, and Communications
  5. Productivity and Unit Labor Costs in Transportation, Storage, and Communications
  6. Real Output and Deflators in Financing, Insurance, Real Estate, and Business Services
  7. Productivity and Unit Labor Costs in Financing, Insurance, Real Estate, and Business Services
  8. Community, Social, and Personal Services
  9. Gross Operating Surplus and Unit Labor Costs by Sector
  10. Output Prices by Sector Relative to Manufacturing Prices
  11. Wages by Sector Relative to Manufacturing Wages
  12. Performance of Tradable and Nontradable Industries

  1. Estimates of Consumption Equations, 1969–94
  2. Consumption Demand Elasticities, 1969–94
  1. Output by Sector
  2. Employment by Sector
  3. Economic and Financial Integration Between Hong Kong and China
  4. Business Cycles
  5. Business Cycles in Hong Kong, China, and the United States
  1. Stock Market Developments
  2. Property Market Developments
  3. Developments in GDP
  4. Trade Developments
  5. Labor Market Developments
  6. Price Developments
  1. Consolidated Accounts
  2. Budget and Actual Effects of Fiscal Policy
  3. Expenditure Developments
  4. Public Expenditure in Hong Kong and Selected Countries
  5. Exchange Rate Developments
  6. Financial Market Developments
  1. Institutional Arrangements for Hong Kong After 1997
  1. Labor Supply in the Mid-1990s
  1. Determinants of the Trade Balance
  1. Fiscal Impulse
  2. The Land Fund and Fiscal Reserves
  3. Cost of the Airport Core Program
  4. Evolution of the Hong Kong Monetary System
  5. Foreign Exchange Reserves
  6. Banking Crisis of the Early 1980s
  7. Summary of Banking Regulations
  8. Mandatory Provident Fund Scheme Proposal
  9. Government Measures for the Residential Property Market
  10. Regulation of the Telecommunications Industry
  1. Economic Background on the Establishment of Hong Kong
  2. Implementation of the Joint Declaration
  3. Selection of the Chief Executive of the Hong Kong Special Administrative Region
  4. Provisions on Monetary and Financial Autonomy of the Hong Kong Special Administrative Region

The following symbols have been used throughout this paper:
. . . to indicate that data are not available;
0.0 to indicate that the figure is zero or less than half the final digit shown;
n.a. to indicate that the item does not exist;
between years or months (e.g., 1994–95 or January–June) to indicate the years or months covered, including the beginning and ending years or months;
/ between years (e.g., 1994/95) to indicate a crop or fiscal (financial) year.
"Billion" means a thousand million.
Minor discrepancies between constituent figures and totals are due to rounding.
The term "country," as used in this paper, does not in all cases refer to a territorial entity that is a state as understood by international law and practice; the term also covers some territorial entities that are not states, but for which statistical data are maintained and provided internationally on a separate and independent basis.

[Chapter 1]