The economy of China's Hong Kong Special Administrative Region (SAR) has entered a new stage of development, and the local government, investors and analysts all have confidence in an economic recovery.

Major financial institutions have upgraded their forecasts on the local economy several times and agreed that Hong Kong has entered a new round of economic development -- with rare strength, width and depth.

"Hong Kong's growth is picking up," says Elley Mao, the SAR government's chief economic advisor, "Both external trade and domestic demand are growing faster than the previous years."

In the first quarter of this year, Hong Kong's GDP grew by 6.8 percent, the fastest ever since 2000. In the second quarter, two-digit growth is expected.

Hong Kong's commodities exports increased by 15.5 percent in the first quarter, compared with decrease in the past years.

This year, tourism has become the fastest-developing industry, thanks to the government's policy to encourage individuals on the mainland to visit Hong Kong.

In the first six months, a total of 11.26 million people visited Hong Kong, an increase of 68 percent year-on-year. Of these travelers, 5.66 million came from the mainland, up by 75 percent.

The Hang Seng Index, which reached its three-year high of 13,800 points earlier this year, is hovering around 12,000 points.

Real estate trading in the first half of the year also set a new high since 1997, with 63,813 deals clinched for a value of 177.32 billion HK dollars.

Between June and August, local unemployment rate reached a new low of 6.9 percent in 28 months, compared with last year's highest of 8.7 percent. At the same time, Hong Kong had 3.25 million labors, the highest ever in history.

The retail sector grew by 7.3 percent in the first quarter and 15.6 percent in the second. Prices of such commodities as food, costume, and electric appliances have gone up.

Hong Kong SAR Chief Executive Tung Chee Hwa attributes the economic revival to the rising tertiary sectors including trade, logistics, tourism and financial industry, most of which are closely related with the mainland.

The launching of the Closer Economic Partnership Arrangement between the mainland and Hong Kong, widely known as CEPA, in July 2003 has further promoted investors' confidence on Hong Kong.

In the first six months, 31,943 new companies registered in Hong Kong, the largest number of newly-registered firms in half a year since 1997.

Vincent Kwan, chief economist of the Hang Seng Bank, speaks highly of the opportunities brought about by CEPA which has reduced barriers on economic exchanges between Hong Kong and the inland areas.

"Currently, Hong Kong's social and economic atmosphere has improved largely as foreign trade and domestic demand has kept on increasing," observed George Leung, chief economist of the HSBC bank. "The fast economic revival in Hong Kong will continue." 
The HSBC bank has forecast a 6.5-percent growth for Hong Kong this year, according to Leung, similar to that by other major financial or research institutions.

According to a survey conducted by AC Nielson, 62 percent people in Hong Kong believe that the economy will turn for the better in Hong Kong in the year to come.

Elley Mao urges people to note changes in the external economic environment, such as possible interest rate regulations by the United States, price hikes in the international oil market, and the macro-economic control efforts by the Chinese government.

"The SAR government has maintained its plan for a 6 percent annual growth," she says.

Editor: Olivia