Hong Kong 

Hong Kong’s economy has mostly recovered since the end of the pandemic, with the city’s growth registering at 3.2 percent in 2023 and 2.5 percent in 2024. Although Hong Kong faced shortages in its labor market following the emigration of large numbers of working-aged residence in 2022, the city has managed to mostly fill these gaps through talent schemes that attract foreign workers, especially from mainland China. Despite additional headwinds deriving from a slowing mainland Chinese economy and increased trade tensions, Hong Kong has managed to maintain a steady rate of growth, with real GDP growth increasing to 3.1 percent in the first quarter of 2025. Overall, the Hong Kong financial system remains resilient, and the Hong Kong government has continued to promote the city’s role as an international financial center. Hong Kong, in many commercial and economic respects, remains a separate legal jurisdiction from mainland China, maintaining a separate currency and monetary policy, as well as separate regulatory structures to supervise companies operating in the Special Administrative Region (SAR).  

However, as noted in the Department of State’s 2024 Hong Kong Policy Act Report, the Chinese government’s imposition of the National Security Law (NSL) on Hong Kong in June 2020 led to structural changes that significantly reduced Hong Kong’s autonomy. Under the Hong Kong Policy Act, the Secretary of State has certified Hong Kong does not warrant treatment under U.S. law in the same manner as U.S. laws were applied to Hong Kong before July 1, 1997. Business and rule of law risks that were formerly limited to mainland China remain of concern in Hong Kong. Nevertheless, Hong Kong is still a significant destination for U.S. trade and investment. Even with a population of less than eight million, Hong Kong was the United States’ eighteenth-largest export market in 2022. Hong Kong’s economy, with advanced institutions and regulatory systems, is bolstered by competitive sectors including financial and professional services, trading, logistics, and historically in tourism, though this is a sector only beginning to recover following the pandemic.

According to Hong Kong government statistics, in 2024 there were 1,390 subsidiaries of U.S. parent companies in Hong Kong, making the United States the third-largest source of international subsidiaries in Hong Kong.  Among those U.S. firms, 670 are regional headquarters or regional offices.

Hong Kong’s key characteristics include its open trade and investment climate, its geographic proximity to Asian markets, and its attraction as a tourism destination.

• Population: 7,534,200 (end-year 2024)
• Visitors: 44.5 million (2024)
• Total GDP: US$406.5 billion (2024)
• GDP Per Capita: US$54,032 (2024)
• Real GDP Growth: +2.5 percent (2024)
• Trade to GDP Ratio: 2,328 percent (2024)
• U.S. Exports: US$27.9 billion (2024)

Key Characteristics 

There are numerous business opportunities given Hong Kong’s professional services talent base, sophisticated infrastructure, and access to mainland China’s manufacturing centers. The city is also known for its advanced infrastructure; lack of restrictions on inward or outward investment; lack of foreign exchange controls; absence of national restrictions on corporate or sectoral ownership; and a simple and low tax regime.

Mainland China is Hong Kong’s largest trading partner. A large number of Hong Kong manufacturers have production facilities in South China, under a rubric the Chinese government has labeled the “Guangdong-Hong Kong-Macau Greater Bay Area (GBA),” with Hong Kong functioning as the region’s services and trade hub. The total population in the GBA is over 86 million.

Hong Kong’s economy is increasingly tied to mainland China. The Closer Economic Partnership Arrangement (CEPA) offers Hong Kong’s products and firms preferential access to the mainland market. CEPA goes beyond China’s World Trade Organization (WTO) commitments, eliminating tariffs and allowing earlier or preferential access to some service sectors.  Foreign companies can also benefit from CEPA. For trade in goods, foreign investors can set up production lines in Hong Kong to produce goods that meet the CEPA rules of origin requirements. For trade in services, companies incorporated in Hong Kong by foreign investors can make use of CEPA if they satisfy the eligibility criteria of a “Hong Kong Service Supplier.”  For example, they must be engaged in business operations in Hong Kong for three to five years or partner with or acquire a CEPA-qualified company.

Macau

Macau’s economy has experienced a strong recovery since the end of the pandemic, with real GDP growth registering at 8.8 percent in 2024.  The SAR’s economy is dominated by the gaming sector, which has experienced a moderately strong recovery and shown resilience even as the mainland Chinese economy has slowed.  The IMF projects Macau’s economy will continue to grow in the years ahead, predicting a growth rate of 3.6 percent in 2025.

Like Hong Kong, Macau is a free port with low taxation. Macau liberalized the gaming industry in 2002, and industry experts calculate that Macau has received an estimated US$24 billion in U.S. foreign direct investment in the gaming industry over the past decade, with U.S.-headquartered gaming companies continuing to pledge new investments in the SAR.  In recent years, the Macau government has undertaken efforts to diversify the economy using its 1+4 model, under which efforts will be made to expand leisure and entertainment offerings (“1”) and promote expansion in four additional sectors: finance, traditional Chinese medicine, new and high tech, and the “Meetings, Incentives, Conferences, and Exhibitions” (MICE) industry.  Though gaming and tourism are the engine of the Macau economy, its exports include textiles, garments, machines and apparatus, footwear, tobacco, food and beverages, and consumer goods. The main export markets are Hong Kong, mainland China, EU, the United States, and Japan, while imports originate primarily from mainland China, Hong Kong, EU, Japan, the United States, and Switzerland.

Macau’s gaming sector dominates the economy and is a primary source of government revenue. The Government of Macau (GOM) taxes casinos for 40 percent of gaming revenue, which includes a direct tax of 35 percent and a five percent contribution for social and welfare purposes. The receipts through the gaming taxes throughout 2024 accounted for 80.5 percent of overall current revenue, totaling around US$11 billion.  The six operators, including local subsidiaries of three U.S. companies, that manage each of Macau’s 30 casinos were all given 10-year license extensions in 2022.  As part of this process, the six concessionaires agreed to invest approximately US$15 billion over the next decade, with 90 percent earmarked for non-gaming investments.  

Key Characteristics 

Macau is also an SAR of China that shares many structural similarities with its close neighbor Hong Kong, yet it offers U.S. suppliers a market with distinct characteristics and opportunities. In this guide, Macau is treated under each chapter following Hong Kong, with emphasis placed on those areas where the business climate diverges.

Formerly a Portuguese colony, Macau reverted to China on December 20, 1999.  Macau retains its own currency, laws, and border controls. Macau’s currency, the pataca, is pegged to the Hong Kong dollar at a rate of HK$1 – MOP$1.03.  Macau does not use common law, but rather code law patterned on the Portuguese system.

Macau’s key characteristics are its attractiveness as a tourism and gaming destination.

• Population: 688,300 (2024)
• Visitors:   35 million (2024)
• Total GDP: US$50.4 billion (2024)
• GDP Per Capita: US$73,154 (2024)
• U.S. Exports: US$933.3 million, 5.8 percent of Macau’s imports (2024) 

Source: Macau Statistic and Census Service

Trading Partners: Mainland China, Hong Kong, Japan, EU, Switzerland, and United States.

Macau also enjoys a CEPA with mainland China. Macau’s 2003 agreement with mainland China – largely parallel to the arrangement Hong Kong enjoys with the mainland – has enhanced its economic integration with the mainland.  In October 2017, Macau and Hong Kong signed a CEPA to strengthen economic and commercial relations between the two cities.  On January 1, 2018, the CEPA between Macau and Hong Kong took effect.