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