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, exceeding four million by 1970 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. This share has declined over the years but they still constituted about 40 per cent throughout the 1990s. Electronic products and watches and clocks are also important industries.

    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 the Mainland was no exception. Coupled with tourism, this led to vast improvements in communications, with an increasing number of people entering the Mainland from or through Hong Kong, the natural gateway, each year. One of Hong Kong's carriers, Hong Kong Dragon Airlines, and eight Chinese airlines — China Southern Airlines, Air China, China Eastern Airlines, China Southwest Airlines, China Northern Airlines, Xiamen Airlines, Yunnan Airlines and China Northwest Airlines — operate about 1 100 flight movements a week in scheduled and non-scheduled services between Hong Kong and some 40 destinations in the Mainland.

    The Kowloon-Canton Railway Corporation operates frequent train services from Hung Hom in Kowloon to the Mainland boundary at Lo Wu. It also operates inter-city through train services between Hong Kong and cities in Guangdong as well as Shanghai and Beijing. Seven trains are available daily from Hung Hom to Guangzhou, three of which call at Dongguan, and one terminates at Zhaoqing via Foshan. Since June 2001, a direct through train service has operated between Hong Kong and Dongguan on Fridays, Saturdays and Sundays. Trains to Shanghai and Beijing operate on alternate days. Cross-boundary coach services operate different routes to Guangdong and other parts of southern China. Daily ferry services operate to Guangzhou and other ports in South China.

    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 45 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 $56 billion in 1992–93 to an estimated $158.3 billion in 2002–03.

    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.

    Expenditure on education facilities and improvements has always been a major budget consideration. There are free and compulsory primary and junior secondary school places for every student up to the age of 15 years. Heavily subsidised senior secondary and tertiary education is provided to ensure students are not deprived of education for lack of financial means. Starting from the 2002–03 school year, all Secondary 3 students from public sector schools who have the ability and wish to continue with their study will be given the opportunity to receive subsidised Secondary 4 education or vocational training.

    Government and non-governmental organisations have made major social welfare advances in the past decade, with expenditure increasing from $6.12 billion in 1991–92 to $32.12 billion in 2002–03. At the same time, social services have developed from providing emergency relief into today's diversified and comprehensive network.

    Medical and health services are undergoing continuous development programmes. In 2002, phase one redevelopment works for Caritas Medical Centre and Kowloon Hospital were completed. Construction works for other major hospital projects, at a total estimated cost of $5.8 billion, would be completed over the next five years.

    With improvements in socio-economic conditions, education, housing, sanitation, nutrition and the introduction of a comprehensive childhood immunisation programme, Hong Kong has witnessed a remarkable decline in the incidence of infectious diseases. An effective disease surveillance system, which comprises clinics, hospitals and laboratories in public and private sectors, is in place to monitor trends and identify any outbreak of disease. A new Public Health Laboratory Centre established in 2001 strengthens the ability to provide good quality laboratory support. With a high polio immunisation rate, coupled with a high level of vigilance, Hong Kong was certified polio-free in 2000. The major health indicators such as life expectancy at birth and infant mortality rate are among the best in 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.