After the Japanese surrender, Chinese civilians — many of whom had moved into the Mainland during the war — returned at the rate of almost 100 000 a month. The population, which by August 1945 had been reduced to about 600 000, rose by the end of 1947 to an estimated 1.8 million. In 1948-49, as the forces of the Chinese Nationalist Government began to face defeat in civil war at the hands of the Communists, Hong Kong received an influx unparalleled in its history. Hundreds of thousands of people — mainly from Kwangtung (Guangdong) Province, Shanghai and other commercial centres — entered Hong Kong during 1949 and the spring of 1950. By mid-1950, the population had swelled to an estimated 2.2 million. It has continued to rise, reaching four million by 1970, five million by 1980, approaching six million by 1990, and now nearing seven million.

After a period of economic stagnation caused by the United Nations' embargo on trade with China, arising from the Korean War, Hong Kong began to industrialise. No longer could Hong Kong rely solely on its port to provide prosperity for its greatly increased population. From the start, the industrial revolution was based on cotton textiles, gradually adding woollens to the list and, in the late 1960s, man-made fibres and made-up garments. Textiles and clothing made up more than half of domestic exports by value during the 1960s.

Although Hong Kong has become increasingly a service-based economy over the past 10 years with domestic merchandise exports steadily declining, textiles and clothing still constitute over 50 per cent of domestic exports by value. Electronics, watches, clocks and jewellery are also major export items.

Over the years, the manufacturing sector has gradually moved from one concentrating on simple, labour-intensive products to one focusing on sophisticated, high value-added products. Taking advantage of the abundant supply of land and labour in the Pearl River Delta, industrialists have expanded their production bases across the boundary while maintaining headquarters operations in Hong Kong. This mode of operation has contributed to economic development in the region and facilitated the transformation of Hong Kong into a services centre.

Associated with events in the Mainland, 1966 saw mounting tension in Hong Kong. During 1967, this developed into a series of civil disturbances, affecting all aspects of life and temporarily paralysing the economy. But, by the year's end, the disturbances were contained and the community continued its tradition of peaceful progress.

Hong Kong continued to expand its role as an entrepôt with its neighbours, and trade with China was no exception. Coupled with tourism, this led to vast improvements in communications, with an increasing number of people entering Mainland China from or through Hong Kong, the natural gateway, each year.

To keep pace with the development, the Government places strong emphasis on improving and expanding infrastructure. As a result, Hong Kong has been transformed into a modern city with efficient road and rail links, and first-class port and airport facilities. New highways have opened up previously remote areas, the railway networks are being expanded, and a new international airport has been in operation at Chek Lap Kok since 1998. Accommodating about 46 per cent of Hong Kong's population, the nine new towns in the New Territories have eased the pressure on developable land in Kowloon and on Hong Kong Island. Current and planned projects would continue to spur the economy, creating job opportunities and enhancing the environment for the community.

The development of Hong Kong's economic base has enabled the public sector to increase spending on housing, education, social welfare and health over the years — from $78.9 billion in 1994-95 to an estimated $152.5 billion in 2004-05.

Hong Kong's public housing programme started with an emergency measure to rehouse some 53 000 people made homeless overnight in a squatter fire on Christmas Day 1953. It has developed into a comprehensive programme that encompasses a wide range of rental and home ownership scheme flats with self-contained facilities.

The programme is in line with the Government's policy objectives to reduce the number of inadequately housed people, to help households gain access to affordable housing and to encourage home ownership in the community. The Hong Kong Housing Authority has primary responsibility for this programme. More than half of Hong Kong's families live in accommodation that they own.

The Government has been investing heavily in education to enhance Hong Kong's competitiveness in a knowledge-based and globalised economy. Free and compulsory primary and junior secondary education is provided to every student up to the age of 15 years. Senior secondary and tertiary education is also heavily subsidised and it is a government policy that no one is deprived of education for lack of financial means. All Secondary 3 students from public sector schools who are able and willing to continue with their studies may receive subsidised Secondary 4 education or vocational training.

The Government and non-governmental organisations have made major social welfare advances in the past decade, with expenditure increasing from $8.787 billion in 1993-94 to $33.715 billion in 2004-05. At the same time, social services have developed from providing emergency relief into today's diversified and comprehensive network.

Hong Kong's public and private health care service providers complement each other and together provide comprehensive health care of a high standard to the community. This is demonstrated by Hong Kong's major health indicators such as life expectancy at birth and infant mortality rate, which are now among the best in the world. Other important factors have been improvements in socio-economic conditions, education, housing, sanitation and nutrition and the introduction of a comprehensive childhood immunisation programme. With a high polio immunisation rate, coupled with a high level of vigilance, Hong Kong was certified polio-free in 2000.

The health care system has adapted to cope with changing social needs and circumstances. For instance, the Department of Health has gradually evolved from a provider of primary care services into a health advocate, focusing on promotion and preventive health care services while maintaining its status as the authority on health and related regulatory matters. Recent endeavours include the introduction of a cervical screening programme, anti-smoking campaigns, and on-going prevention and health promotion programmes on HIV/AIDS.

In the wake of the SARS outbreak in 2003, the Government took a series of measures to strengthen its public health infrastructure. One milestone was the establishment of the Centre for Health Protection (CHP) under the Department of Health in June 2004. By strengthening the surveillance system and response capacity for infectious diseases, CHP aims to achieve effective prevention and control of diseases in Hong Kong in collaboration with the local community, the mainland authorities, the World Health Organisation and other partners around the world.

A comprehensive system of labour legislation has been developed to provide for employees' benefits and protection, employees' compensation, occupational safety and health. Free employment services are provided to help job-seekers find work and employers to recruit staff. The Employees Retraining Board provides quality retraining courses and services to the unemployed and potentially unemployed in order to enhance their employability and meet the needs of employers and the Hong Kong economy.