How Big is Hong Kong's Economy?

Hong Kong is frequently described 

as one of the world’s most prominent financial centers—a global city 

comparable to New York, London, and Singapore. But when we take a look at the 

country’s nominal gross domestic product (GDP) which measures the total value of goods and 

services produced within a country’s borders, Hong Kong’s economic output appears modest 

in comparison to other major financial hubs. Let’s graph this out to understand the economic 

output of Hong Kong. Here’s a graph on Hong Kong’s nominal GDP, data from the World Bank. Here you 

can see that Hong Kong’s GDP sits at only $380 billion as of the latest year available for 2023. 

That is actually lower than Singapore. Here’s the updated graph adding Singapore into it. Here, 

you can see that Singapore far surpasses Hong Kong. The difference between the two wasn’t 

actually this big a couple of years back, as you can see from the graph. It was only after 

the Covid-19 pandemic that Hong Kong got left behind. Now, the same story also applies for other 

financial centers. For instance, if we add Tokyo, Switzerland, London and New York, we get to see 

just how small Hong Kong’s economic output is. Being behind in this indicator may 

raise some questions for some observers. Does this mean that Hong Kong’s economy is 

actually small? Are they not as competitive as they are often portrayed? Well, the answer 

lies not in the concept of GDP, but rather what they produce for the rest of the world. GDP is 

merely a calculation about the value of goods and services produced within a country’s borders, 

but it does not fully capture the economic impact or global significance of financial centers 

like Hong Kong. That is how we are going to understand how big Hong Kong’s economy is, 

and its importance for the rest of the world. However, before we understand that, it is 

first important to acknowledge that Hong Kong’s domestic economic output is very much 

lagging behind. Here’s a graph on the GDP per capita of Hong Kong. What this graph is 

about is the economic output per person in Hong Kong. By focusing on GDP per capita, we 

can see how efficiently the economy generates wealth relative to its population size. 

Here, Hong Kong still performs impressively, ranking among the highest globally, even 

surpassing many advanced economies like Japan. But if we add Singapore, Switzerland, Tokyo, London and New York, we get to see that 

in the same concept of nominal GDP, Hong Kong is also lagging behind when we look at 

the GDP per capita. Indeed, the first economic concept that we are using – gross domestic 

product, already shows that while Hong Kong is ahead in global averages, they are actually behind 

when we compare them to other financial centers. But as we just mentioned, it’s not all about 

GDP. So, let’s talk about the other metrics. Amongst the most important metrics in 

understanding the size of Hong Kong’s importance to the world is its financial industry. 

The single-reason why Hong Kong is so important is simply because of this. They are a financial 

powerhouse that plays a critical role in global capital markets, acting as a bridge between 

China and the rest of the world. They provide the infrastructure, expertise, and confidence 

necessary for global investors to access Chinese markets and for Chinese companies 

to raise capital internationally. There are two key datasets that would tell us 

how big Hong Kong’s financial industry is – their stock market, and their asset management. 

Let’s first start with their stock market. Hong Kong’s stock market, also known as the Hong 

Kong Stock Exchange (HKEX) is consistently ranked among the largest stock exchanges in the world by 

market capitalization. Here’s a list of some of the largest stock exchanges in the entire world. 

You can see that in Asia, amongst the largest stock exchanges includes the Japan Exchange 

Group with a value of over $6.5 trillion, Taiwan Exchange with over $2.2 trillion, and 

even Singapore at $647 billion. But if you take a closer look, you get to see that Hong Kong far 

surpasses Singapore with its Hong Kong Exchanges and Clearing worth a massive $4.5 trillion. 

Even though Japan is higher than Hong Kong, you should know that Hong Kong is but a small city 

when we compare it to Japan. A reason for this is because Hong Kong serves as a global gateway 

for capital, particularly for Chinese companies. Here’s a list of select listings in the Hong 

Kong Exchanges and Clearing. Here you can see several Chinese companies like Tencent, Meituan, 

Xiao mi corporation, and so on. These companies, while they have some presence in Hong Kong, 

are mostly operating in mainland China. And you can see the effect of these mainland Chinese 

companies. Tencent’s market capitalization is worth over $3.45 trillion Hong Kong dollars. 

That is about $441.6 billion US dollars. Secondly, there’s also asset management. Hong 

Kong hosts a wide array of international fund managers and asset management firms. Here’s 

a graph on Hong Kong’s Asset and Wealth Management Business. Here you can see that 

as of the latest year available for 2023, Hong Kong’s asset and wealth management business 

is a massive $31.1 trillion Hong Kong dollars, which is approximately $3.98 trillion US dollars. Comparatively, here’s a graph on Singapore’s 

assets under management. Here, you can see that for the same year of 2023, Singapore 

had over $5.4 trillion Singaporean dollars, or about $3.99 trillion US dollars. 

They are about the same as Hong Kong. Thirdly, another key important part 

of Hong Kong’s financial landscape is their banking assets. The reason why this is 

important is because banking assets reflect the overall strength and stability of Hong 

Kong’s financial system. Hong Kong is home to some of the largest banks in the world, 

such as HSBC and Bank of China (Hong Kong). Here’s a graph on the customer deposits in Hong 

Kong by currency. You can see that in total, there are over $17 trillion Hong Kong dollars 

deposited in Hong Kong. Over $7 trillion of which are U.S. dollars. This shows just 

how much is deposited into the banks in Hong Kong. What makes this so important is 

because Hong Kong benefits a lot from these deposits. These deposits provide liquidity that 

supports Hong Kong’s robust financial system, enabling banks to lend, invest, and facilitate 

international trade and transactions. Beyond asset management, the stock exchange and 

banking assets, another key important part of Hong Kong’s economy is trade. Historically, trade 

was Hong Kong’s lifeblood. Its location next to the Pearl River Delta (which encompasses major 

manufacturing hubs in southern China) makes it an ideal port for re-exports. And that is what 

primarily drives Hong Kong’s trade – re-exports. That means the goods that are imported into Hong 

Kong are exported without undergoing significant processing. This model has allowed Hong Kong 

to act as a middleman for global supply chains. Here’s a graph on Hong Kong’s Merchandise 

exports, data from the World Bank. Here you can see that in the latest year available for 

2023, Hong Kong’s merchandise exports were a massive $573 billion. That’s actually very 

big, considering Hong Kong’s GDP and size. Here’s a table about the Merchandise 

trade as a percentage of GDP. Here, you can see that Hong Kong has the world’s highest 

percentage of merchandise trade relative to GDP, standing at over 322.4%. This staggering figure 

shows Hong Kong’s role as a re-export hub, where the value of goods passing through the city 

far exceeds the size of its domestic economy. Finally, let’s talk about Hong Kong’s 

International investment position. This data reflects the city’s net financial position 

with the rest of the world. It measures the total value of Hong Kong’s assets held abroad 

minus liabilities to foreign entities. Here, you can see that Hong Kong has International 

Investment Position assets worth over $48 trillion Hong Kong dollars for 2023. 

That is over $6.14 trillion US dollars. This is composed of direct investments, portfolio 

investments, reserve assets and so on. To give you a clear picture, under the portfolio investments, 

there’s the Equity and investment fund shares and it is worth $8.1 trillion HK dollars. This is 

worth approximately $1.04 trillion. What this equity and investment fund share is about is the 

ownership of stocks, mutual funds, and similar financial instruments held internationally. For 

instance, a company or an investor that is based in Hong Kong might purchase shares in foreign 

corporations like United States corporations known as Microsoft, Walmart, and so on. They 

could also invest them in global mutual funds. As you can see, Hong Kong’s economy is indeed 

massive. They live up to the title of being a financial center. But there’s one more aspect 

that we want to talk about Hong Kong, and it doesn’t have anything to do with their financial 

industry – but rather how their country operates. One of Hong Kong’s unique aspects that 

makes it a competitive economy is their taxation system. Hong Kong has one of the 

most business-friendly taxation systems in the world. With a simple and low tax regime, 

it attracts businesses and investors globally. Hong Kong has low corporate taxes, and no 

taxes on dividends, capital gains, or sales. Here’s a graph on Hong Kong’s total tax revenue, 

as a percentage of GDP. This data shows the proportion of the economy contributed by 

taxes. Here you can see that for 2022, the tax to GDP is at 14.1%. Comparatively to 

Singapore, Hong Kong actually has higher tax to GDP ratios. But what’s surprising about this 

is the fact that Singapore has value added taxes, and higher corporate taxes. 

The difference, however, requires a deep dive into the data, but 

we will leave that for another video. Now, the reason why we want to show you the 

taxation system of Hong Kong is because it highlights the city’s strategic approach 

to economic management. Hong Kong's low tax rates and straightforward system are designed 

to stimulate business activity and attract international investments. This simplicity not 

only encourages companies to base their operations in Hong Kong but also fuels consumer confidence 

by minimizing the tax burden on individuals. So, as you can see, Despite being geographically 

small, Hong Kong has an economy that stands tall on the global stage. But, what makes 

Hong Kong different from Singapore, and many other economies globally, is the 

fact that Hong Kong is heavily reliant on mainland China. But anyway, do let us 

know what you think. Thanks for watching!