Hong Kong: A Special Administrative Region
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Governments of major Chinese cities, such as Shanghai, Guangzhou, Shenzhen and Beijing, have put in place strategies to attract foreign investors. Hong Kong is included in this list, and has similar characteristics to other cities, such as a friendly business environment and a system of tax incentives. However, its status as a Special Administrative Region distinguishes it from other mainland Chinese cities, giving it a special advantage.
One China: Two Systems
One country, two systems. Hong Kong and Macao are separate administrative areas under the authority of the People's Republic of China. In accordance with the principle of "one country, two systems", each city has its own independent government, comprising legislative, executive and judicial institutions, as well as individual economic and fiscal policies that are distinct from those of the rest of mainland China.
It should also be noted that Hong Kong's legal framework is established by the Basic Law, and the constitution is built on the basis of the Common Law. Pursuant to the Basic Law, the legal system and statutes of the Hong Kong Special Administrative Region (HKSAR) will continue to apply. This structure is more conducive to entrepreneurs and investors, as they are well acquainted with the common law system.
In this regard, there are two aspects that stand out as Hong Kong’s strengths. Firstly, government transparency is a plus. Hong Kong ranked #4 in Asia Pacific and #12 in the world for government transparency in 2021. The city is one of the “cleanest” areas to do business according to the 2021 Corruption Perceptions Index compiled by Transparency International. The Independent Commission Against Corruption was established in 1974 to show the Hong Kong government’s commitment to fighting corruption and creating a fair and corruption-free business environment for all companies operating in Hong Kong.
On the other hand, Hong Kong has been using its currency, the Hong Kong dollar, instead of the yuan as China's currency. Maintaining a stable currency between the Hong Kong dollar and the US dollar is a priority in the monetary policies of the Hong Kong Special Administrative Region government. Currency stability is an important factor driving the development of Hong Kong's economy and making it the world's financial center. Therefore, the Hong Kong government is committed to maintaining a stable currency as the basis for developing its economy, attracting more foreign investors, and creating a one-stop shop in the financial system between Hong Kong and China.
In conclusion, it is worth mentioning that the above has a direct impact on the business world. From the above, the main benefits of Hong Kong emerge:
- Attractive tax system.
- Business privacy.
- Simplicity of corporate regulation.
- Free trade.
- Freedom of currency.
- High international reputation.
