Hong Kong has been roundly praised as a free market paradise, ideal for the attraction of unfettered capitalist exchange, providing a natural environment for a thriving international financial centre. This chapter seeks to establish the strengths and weaknesses of the IFC in Hong Kong in the period before China's Open Door Policy was launched in 1978, with particular focus on the regulatory environment and the range of activity. Measuring Hong Kong's international financial flows has been hampered by the lack of official statistics and this chapter presents new data gleaned from archive sources. The evidence shows that while Hong Kong was the major regional banking centre in Asia, it was also deficient in some key elements of an IFC and the regulatory environment could be a hindrance as well as an aid to international banking and finance.
