Hong Kong’s econ­omy has ar­rived at a cross­roads, re­liance on the main­land key

Global Times US Edition - - BIZCOMMENT - By Wei Jian­guo The au­thor is a for­mer Chi­nese vice min­is­ter of com­merce and executive deputy di­rec­tor of the China Cen­ter for In­ter­na­tional Eco­nomic Ex­changes. bi­zopin­[email protected]­al­times. com.cn

Since the Chi­nese main­land’s re­form and open­ing-up be­gan, it has re­ceived world­wide at­ten­tion for its great achieve­ments for which Hong Kong has played a valu­able and ir­re­place­able role.

The na­tion’s econ­omy is shift­ing from high-speed to high-qual­ity growth. Hong Kong stands at a key in­ter­sec­tion where it can re­con­sider its role and seize op­por­tu­ni­ties.

In the past, the city con­trib­uted to China’s eco­nomic growth in three ways.

First, as re­form and open­ing-up be­gan, the eco­nomic re­la­tion­ship be­tween the main­land and Hong Kong en­tered a fast track for de­vel­op­ment, with en­tre­pot trade as the most sig­nif­i­cant driver.

De­spite in­vest­ment un­cer­tain­ties on the main­land, Hong Kong busi­ness peo­ple took the lead in build­ing fac­to­ries. It was dur­ing this pe­riod that the city’s man­u­fac­tur­ing sec­tors be­gan to move north­ward.

Hong Kong busi­ness peo­ple played a dual role as man­u­fac­tur­ers and traders. They not only brought to the main­land much-needed cap­i­tal, tech­nol­ogy, equip­ment, mod­ern man­age­ment models and busi­ness rules, but also as­sisted with main­land man­u­fac­tur­ing so it could gain ac­cess to the in­ter­na­tional mar­ket.

Sec­ond, Hong Kong has been the largest source of over­seas in­vest­ment in the main­land. Busi­nesses in Tai­wan, Ma­cao and even some over­seas com­pa­nies in­vested in the main­land through Hong Kong. They were re­garded as im­por­tant forces be­hind main­land de­vel­op­ment.

Third, Hong Kong has served as a bridge con­nect­ing the Chi­nese main­land and the West. Their mar­ket rules have al­ways been in line with in­ter­na­tional stan­dards. With Hong Kong as a ref­er­ence, many main­land

en­ter­prises learned how to func­tion in a ma­ture in­ter­na­tional mar­ket econ­omy and ac­cu­mu­late ex­pe­ri­ence nec­es­sary to go global.

Hong Kong also ben­e­fit­ted dur­ing this process. Its GDP in­creased from $18.3 bil­lion in 1978 to $362.9 bil­lion in 2018, with GDP per capita ris­ing from $3,923 in 1978 to $48,700 in 2018. Such an ac­com­plish­ment could have only hap­pened by com­ply­ing with the main­land’s eco­nomic phe­nom­e­non.

The main­land has been ad­just­ing to rapid eco­nomic changes over the past four decades and Hong Kong has kept the pace ac­cord­ingly.

The in­ter­na­tional city has adapted to the changes, yet mal­ad­just­ments re­main. Voices from both sides have emerged, claim­ing that the other is a bur­den, and be­liev­ing that they them­selves are the ones that will lose in this eco­nomic tie.

Some have even sug­gested a de­cou­pling be­tween the main­land and Hong Kong. This opin­ion is nar­row and short­sighted. With­out Hong Kong’s pros­per­ity, the fu­ture of the main­land is in­com­plete. With­out the main­land’s growth mo­men­tum for the next 40 years, there is no fu­ture for Hong Kong should it wish to de­pend on it­self, Europe, or the US. With­out the joint ef­forts of Hong Kong and the main­land, China’s re­form and open­ing-up would not have reached such high lev­els.

At this key in­ter­sec­tion, how can Hong Kong seize op­por­tu­nity and es­tab­lish a solid foun­da­tion for a bright fu­ture? The key lies in re­liance on the main­land. China is the world’s sec­ond­largest econ­omy; the re­la­tion­ship be­tween the main­land and Hong Kong can­not be like it used to be.

There are three points Hong Kong must ad­dress should it want to fit within the main­land’s de­vel­op­ment map.

First, Hong Kong must con­duct more re­search on the cen­tral gov­ern­ment’s pol­icy ori­en­ta­tion, es­pe­cially on projects such as the Belt and Road Ini­tia­tive, the Guang­dong-hong Kongma­cao Greater Bay Area, the Yangtze River Delta, and the Bei­jing-tian­jin­hebei re­gion. The city needs to study how to bet­ter take ad­van­tage of these projects.

Sec­ond, the city can­not deny it has made ad­vances in fi­nan­cial and ser­vice sec­tors, and also with con­trol net­works and ser­vices trade re­sources. World­wide, pro­duc­tion fac­tors are un­der­go­ing ad­just­ment and re­arrange­ment. Against this back­drop, if Hong Kong can bet­ter con­nect and co­or­di­nate with the main­land, and im­prove its fi­nan­cial role in the Greater Bay Area, then the city will ac­quire re­newed de­vel­op­ment im­pe­tus.

Third, Hong Kong needs to con­tinue to be the in­ter­me­di­ary be­tween the main­land and the West. China re­cently an­nounced it would turn Shenzhen into a model area. Though Shenzhen has grown from a small vil­lage into a ma­jor city, it can still learn a lot from Hong Kong.

The ques­tion is, how can Hong Kong and Shenzhen be aligned while re­tain­ing their fea­tures? How can they make the most of in­sti­tu­tional ad­van­tages with two dif­fer­ent sys­tems?

More ef­fort is ex­pected from Hong Kong, and the main­land will have to pro­vide en­cour­age­ment through im­ple­ment­ing more poli­cies. It is not only the re­spon­si­bil­ity of the cen­tral gov­ern­ment and the Hong Kong Spe­cial Ad­min­is­tra­tive Re­gion gov­ern­ment, but col­leges, uni­ver­si­ties, think tanks and the city’s res­i­dents must also con­trib­ute.

Lo­cal fi­nan­cial in­sti­tu­tions, agents and cham­bers of com­merce will need to take on a more ac­tive role in the Belt and Road Ini­tia­tive. They will also need to in­crease their con­nec­tion with the main­land to mit­i­gate neg­a­tive sen­ti­ments in so­ci­ety and cre­ate an en­vi­ron­ment fa­vor­able to eco­nomic co­op­er­a­tion. A sub­stan­tial amount of work still re­mains.

Il­lus­tra­tion: Luo Xuan/gt

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