With the rising economic power, China has been gradually undergoing slow but steady financial modernization. The economic success of Hong Kong is the indicator to it. The territory has established itself as strong financial sector in the last two decades. Hong Kong yearly incomes have been one of the highest levels in the world. The financial GDP share has increased from 12% from the year 2003 to close to 20% in the last year enabling the movement of finance to all sections of the markets. This rise in economy has been crucial in counterbalancing the gradual movement of the industry of Hong Kong and reach mainland over the same period.
In this regard, you can say that the success of being a major international financial sector is because of their strong and rigid banking and financial laws. The basic law of Hong Kong provides that the government of HKSAR (Hong Kong Special Administrative Region) will give right economic and legal environment for maintaining the status of Hong Kong as international financial centre. More importantly Article 110 states that the administrative body of HKSAR can formulate monetary and financial policies on their own to safeguard the operation of the financial markets and maintain them in accordance with the law.
Hong Kong has an organized system of financial institutions which provides wide range of flexible financial services and products to local and international investors. Hong Kong has ranked as top financial centre and came third among 75 participating financial centers including London and New York. The success in Hong King Equity market has been quite impressive. The equity market capitalization and trading turnover is estimated to have reached US$21,077 billion in 2010 making it seventh largest in the world. Today Hong Kong can boast about 152 approved banks. The foreign exchange market of Hong Kong is the largest and free market in the world. Hong Kong insurance and gold future market has been rapidly growing since then.
Another interesting development in Hong Kong financial market is the steady growth and internationalization of the Renminbi (RNB) .This has resulted in the movement of the economic magnitude from the west to the east of the mainland. Hong Kong has the advantage of having skilled labor and strong regulatory financial body with high quality of business services to provide financial support to China. The advantage of “One country, Two Systems” principle has made Hong Kong a testing ground for internationalization of RNB.
The year 2004 has been pivotal for RMB growth as credit cards and deposits were introduced in that year. Gradually gold trading, bond insurance and other settlement services were extended under RNB making Hong Kong offshore investment in Asia and beyond.
Today Hong Kong has emerged to be Asia’s No 1 City. While helping China to improve their financial business activities and administrative efficiency, it has outnumbered Japan to be the first largest economy and financial hub. Hong Kong stands as an important part in the growth of China in the present times.
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