The emphasis on the economic aspects of Hong Kong is of great significance considering it is one of the world's freest and most dynamic economic centers and considering the commotion under the effect of two international economic crisis" during the SAR's first four years of existence. It is also useful in reminding the original British logic in acquiring the territory to facilitate China trade and the PRC's hope for the HKSAR as an economic, not political, city (Yeung, 2001).
The paper begins with a brief economic overview of Hong Kong's economy which provides a foundation for the analysis carried on in following sections. The second section includes the rationale and broad implications of the WTO agreement on China, as well as, the potential risks and drawbacks this event would have. This section antecedes the latter one concerning the economic implications for Hong Kong since it provides the necessary basis to understand the "spill-over" effect on Hong Kong which is highly dependant on China's own effects.
Brief Economic Overview.
Hong Kong is one of the most open, outward-looking economies in the world (www.info.gov.hk). It has been rated by the Heritage Foundation of the US as the world's freest economy for the past seven years. Under the principle of "one country, two systems", the HKSAR has a high degree of legal and economic autonomy (Chan, 2001). In Hong Kong, there are no tariffs, no quotas, no foreign exchange controls and no restrictions on investments. Hong Kong embraces the globalization of international trade and economic activities. Economy is mainly build around providing financial and advanced business services for foreign companies, exports, and around acting as a business broker for China (Hung, 2000); it is, therefore, highly reliable on foreign investment. The main key elements of Hong Kong's success as an economic centre are its sound economic fundamentals, mainly: the government's policy of minimum intervention, practices of low taxation, free and fair market competition, orthodox legal and financial framework and a convertible and secure currency (Hung, 2000).