HK’s traditional and new roles to continue being boosted
Tu Haiming says city can consolidate its status as a global financial hub by serving economic needs of the mainland
Amid talk about “economic decoupling” and “financial Cold War”, some Western politicians and media outlets are feverishly prophesying again the “inevitable” decline or demise of Hong Kong as an international center for finance and commerce. These prophets of doom have been obsessed with foretelling Hong Kong’s demise for decades since the 1980s, when the idea of China resuming the exercise of sovereignty over Hong Kong was formally floated. But Hong Kong’s continuous success and economic vibrancy have disappointed them repeatedly. And it seems that they will be disappointed again this time.
With the globalization process having advanced for decades, major economies in the world have inseparably intertwined, making the idea of “decoupling” whimsical at best. Since the Donald Trump administration imposed high tariffs on Chinese imports four years ago, China’s trade surplus with the US has, instead of being curbed, increased substantially. While Washington vowed to find alternatives to Chinese goods, it has been unsuccessful. Rather, the high tariffs on Chinese goods have begun to backfire on the US, causing hyperinflation and public grievances that have forced Washington to consider abolishing some of these additional tariffs.
These latest developments in the Sino-US trade war suggest that politicizing economic issues is counterproductive. Capital has an instinct for profit, and only flows to profitable markets; businesspeople make investment decisions based on economic logic.
Some Western politicians and media who have a political ax to grind have recently tried to cast Hong Kong in a negative light, claiming Beijing is turning the special administrative region into just another Chinese city with the implementation of the National Security Law for Hong Kong and the revamping of its electoral system. The truth is, among the many successful cities in China, Hong Kong is the only one that can play well the role of a “super connector” between China and the rest of the world. There is simply no reason for Beijing to change the status quo of Hong Kong.
The enactment of the National Security Law and the revamping of Hong Kong’s electoral system, both implemented after the months-long social unrest in the city in 2019-20, are intended to help the city restore social stability and prevent political tumult from happening in the future. Social stability is one of the key factors in measuring the quality of a business environment. No seasoned businesspeople would invest in a socially or politically unstable market.
Contrary to the claims of those Chinabashers, Hong Kong’s business environment has changed for the better, with peace and stability having been fully restored after the enactment of the National Security Law and the revamping of Hong Kong’s electoral system. In the past two years, both the data released by the World Bank on business enabling environment and the Global Competitiveness Report issued by the World Economic Forum concluded that Hong Kong has one of the most business-friendly environments in the world and remains well within the top 10 list of global competitiveness.
Being one of the freest economies in the world with virtually no restrictions on foreign investments, capital flow and origin of business, Hong Kong is gifted with many enabling factors that attract multinational firms to establish their regional headquarters in Hong Kong, including its free-trade practice devoid of barriers, a sound and highly transparent legal system, a corrupt-free and efficient government, a simple and low taxation system, and advanced information technology infrastructure.
Hong Kong’s distinguished business environment is ensured by the Basic Law, which guarantees the free flow and conversion of funds, and mandates the SAR government to provide a business and legal environment conducive to maintaining Hong Kong’s status as an international financial, trade, shipping and aviation center. The National Security Law targets only crimes endangering national security and in no way hurts or hinders businesses conducting normal operations in the city. All rights and freedoms provided for by the Basic Law are respected and upheld under the National Security Law.
Aside from its excellent business environment, Hong Kong can continue to leverage the Chinese mainland factor to consolidate its traditional roles and acquire new roles.
While economic growth on the Chinese mainland has somewhat slowed down in recent years, it has remained the fastest among the major economies in the world, contributing more than 30 percent of overall global economic growth in recent years. By serving the various needs of the huge economic hinterland on the mainland, Hong Kong can further consolidate its traditional status as an international financial center, an international shipping center, an international center for commerce and trade, and an international aviation hub.
Meanwhile, Hong Kong is on course to acquire new roles as an international innovation and technology hub, a center for international legal and dispute resolution services in the Asia-Pacific region, a regional intellectual property trading center, and an East-meetsWest center for international cultural and art exchange, with the strong support of the central government under the national 14th Five-Year Plan (2021-25). These new roles will be facilitated by proactively participating in the Guangdong-Hong Kong-Macao Greater Bay Area and the Belt and Road Initiative.
Beijing continues to support Hong Kong in putting into full play its advantages under the “one country, two systems” framework to create a world-class business environment and become a destination for global investments. Xia Baolong, director of the Hong Kong and Macao Affairs of the State Council, has recently expressed the central government’s sincere hope that Hong Kong will create new glory by becoming a modern metropolis brimming with vitality and acquiring more significant roles, aside from consolidating its status as international financial, trade and logistics center.