Free Trade Business Economies

Hong Kong is one of the world’s most open economies with a business-friendly environment characterised by free trade. Nevertheless, with a mature financial regulatory regime and legal system. A city with simple taxation and low tax rates, along with advanced transport and telecommunications infrastructures.

Financial Market

Hong Kong’s financial markets offer high levels of liquidity. It is governed by effective and transparent regulations that are in line with international standards. Together with other important financial centres, such as London and New York. Hong Kong’s markets play a vital role in the global financial system which operates round the clock. Hong Kong also provides an important gateway to the Mainland China economy and financial system. The financial sector employs 246,000 people. This accounts for 6.5% of the city’s total workforce, and 16.6% of its GDP. Hong Kong was the world’s seventh- and Asia’s second-largest banking centre, with assets HK$22.7 trillion in October 2017. The asset management business is highly international. About 71% of assets under management coming from investors outside Hong Kong.

Monetary Policy

The overriding objective of Hong Kong’s monetary policy is currency stability defined as a stable external exchange value of Hong Kong’s currency against the US dollar. As a rule of around HK$7.8 to US$1. The interbank money market is also well established, supported by a robust real-time gross settlement interbank payment system enabling transactions in US$, HK$, Euro and Renminbi to be settled in real time.

RMB Business hub

Amid continuing internationalisation of RMB, Hong Kong is the world’s largest offshore RMB business hub in the World. On the whole, supporting cross-border trade transactions, investment, financing and asset management. As well as the development of RMB bonds, loans and equity products. In 2016, RMB trade settlement handled by banks in Hong Kong amounted to RMB4,542 billion and RMB deposits amounted to RMB625 billion.

Cooperation with Global partners

Active international engagement and cooperation with global partners, such as membership of the Asia-Pacific Economic Cooperation forum, World Trade Organisation, World Customs Organisation, etc. Also, participation in the Trade Service Agreements of the World Trade Organisation, and the automatic exchange of financial account information in tax matters (“AEOI”) coordinated by the Organisation of Economic Co-operation and Development (“OECD”), proven Hong Kong is able to maintain its status as an international financial and trading centre. In 2016, the city accounted for 3.3% of world merchandise trade amounting to US$1,064 billion, its principal trading partners being Mainland China, the US and Taiwan.

Participant in Global bodies

Hong Kong is an active participant in global standard-setting bodies such as the International Monetary Fund, the World Bank, the Basel Committee on Banking Supervision, the International Organisation of Securities Commissions, the International Association of Insurance Supervisors, the FATF and the APG.

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Background 

Hong Kong is a Special Administrative Region of the People’s Republic of China (“PRC”). Not only providing a safe and secure business environment to all. It also benefits from locating on the eastern Pearl River Delta of the South China Sea. With over 7.5 million people of various nationalities in a 1,104-square-kilometre territory. Hong Kong is one of the most densely populated places in the world. Then it provides sufficient man-power.

Following British ruled from 1841 to 1997. China resumed the exercise of sovereignty over Hong Kong on 1 July 1997. Although it is a special administrative region of China. It still follows English common law, which means it recognises trusts as a concept. 

Government Structure

The Basic Law is a national law of the PRC and Hong Kong’s constitutional document. It is the corner stone under “One Country, Two System” principle. Therefore, the city is able to exercise a high degree of autonomy and enjoy executive, legislative and independent judicial power. 

Very probably, the territory has the most laissez-faire economy in the world. The government’s policy is strictly non-interventionist. Government controls and disclosure requirements on businesses are minimal. For the private companies, Hong Kong only requires the minimal capital. Whereas, for company incorporating as a wholly-owned subsidiary, Hong Kong also requires the minimal financial statement.

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Legal System and the Judiciary – The Basic Law

Under the Basic Law of Hong Kong, it exercises the judicial power of the Region and is independent of the executive and legislative branches of the Government. The courts in Hong Kong hear and adjudicate all prosecutions and civil disputes, including all public and private law matters.

The rule of law and the independence of the Judiciary are the cornerstone of the Hong Kong Legal system. Under the “One Country, Two Systems” policy, Hong Kong has its own legal system based on the common law, and local legislation codified in the laws of Hong Kong. Laws in force in Hong Kong include

1. The Basic Law
2. PRC national laws listed in Annex III to the Basic Law as applied to Hong Kong;
3. The laws previously in force in Hong Kong before 1^st July 1997, including
   • The Common Law
   • Rules of equity, ordinances, subordinate legislation and customary law, except for any that contravene the Basic Law, and
   • Subject to any amendment by LegCo;
4. Law enacted by LegCo. Legislation in force in Hong Kong

The Basic Law provides that the Department of Justice (“DoJ”) controls criminal prosecutions, free from any interference. The Judiciary, i.e. the courts of Hong Kong, is responsible for the administration of justice in Hong Kong and the adjudication of cases, criminal and civil, in accordance with laws. DoJ exercises judicial power independently, free from any interference. It is fundamental to Hong Kong’s legal system that members of the Judiciary are independent of the executive and legislative arms of Hong Kong.

The Courts

The courts of Hong Kong comprise the Court of Final Appeal, the High Court (which consists of the Court of Appeal and the Court of First Instance), the District Court, the Magistrates’ Courts and other specialised Courts and Tribunals.

The Court of Final Appeal

The Court of Final Appeal is the final appellate court within the court system with the power of final adjudication. It hears appeals involving important question of law, including in particular points of public and constitutional importance. Or where leave to appeal has otherwise been granted as provided in the governing ordinance. There are one Chief Justice, three Permanent Judges, and 15 Non-Permanent Judges. Final appeals are heard by the full court comprising 5 judges, usually including the Chief Justice, 3 permanent members and one non-permanent member.  Court of Final Appeal may require invite judges from other common law jurisdictions to sit on the court and a number of distinguished judges from the United Kingdom, Australia and New Zealand have sat and continue to sit as members of the court.

The Court of Appeal of the High Court

The Court of Appeal of the High Court hears appeals on civil and criminal matters from the Court of First Instance and the District Court, as well as appeals from the Lands Tribunal. It also makes rulings on questions of law referred to it by the lower courts. There are 13 Justices of Appeal, including the Chief Judge of the High Court and 3 Vice-Presidents.

The Court of First Instance of the High Court

The Court of First Instance of the High Court, comprising 27 Judges. Also it has unlimited jurisdiction in both civil and criminal matter. In its appellate jurisdiction, it hears appeals from the Magistrates’ Courts and other tribunals. The most serious offences, such as murder, manslaughter, rape, armed robbery, complex commercial fraud and drug offences involving large quantities, are tired in the Court of First Instance, by a judge sitting with a jury of 7 (or 9 on the special direction of the judge)

The District Court

The District Court has limited jurisdiction in both civil and criminal matters. In its criminal jurisdiction, the court may try the more serious offences with the exception of a few very serious offences such as murder, manslaughter and rape. The maximum term of imprisonment it can impose is seven years. There are 43 District Judges, including the Chief District Judge.

The Magistrates’ Courts

The Magistrates’ Courts exercise criminal jurisdiction over a wide range of offences. Although there is a general limited of two years imprisonment. Or a fine of HK$100,000 certain statutory provisions give magistrates the power to sentence up to 3 years’ imprisonment and to impose a fine up to HK$5 million. Prosecution of indictable offences commences in the Magistrates’ Courts. Depending on the seriousness of a case, the DoJ may apply to have a case transferred to the District Court. Or committed to the Court of First Instance of the High Court. As at 8 February 2018, there were 72 magistrates sitting in 7 Magistrates’ Courts.

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